All Related Questions of Payout Ratio

Q: Assuming the following ratios are constant, what is the sustainable growth

Assuming the following ratios are constant, what is the sustainable growth rate? Total asset turnover 5 2.20 Profit margin 5 7.4% Equity multiplier 5 1.40 Payout ratio 5 40%

Q: The Steiben Company has an ROE of 13.1 percent and

The Steiben Company has an ROE of 13.1 percent and a payout ratio of 40 percent. a. What is the company’s sustainable growth rate? b. Can the company’s actual growth rate be different from its sustain...

Q: Bulla Recording, Inc., wishes to maintain a growth rate of

Bulla Recording, Inc., wishes to maintain a growth rate of 12 percent per year and a debt–equity ratio of .40. Profit margin is 5.3 percent, and the ratio of total assets to sales is constant at .75....

Q: The most recent financial statements for Fontenot Co. are shown here

The most recent financial statements for Fontenot Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant deb...

Q: Assume that you have just been hired as business manager of Campus

Assume that you have just been hired as business manager of Campus Deli (CD), which is located adjacent to the campus. Sales were $1,100,000 last year, variable costs were 60% of sales, and fixed cost...

Q: Buena Terra Corporation is reviewing its capital budget for the upcoming year

Buena Terra Corporation is reviewing its capital budget for the upcoming year. It has paid a $3.00 dividend per share (DPS) for the past several years, and its shareholders expect the dividend to rema...

Q: Austin Grocers recently reported the following 2008 income statement (in millions of

Austin Grocers recently reported the following 2008 income statement (in millions of dollars): This year the company is forecasting a 25% increase in sales; and it expects that its year-end operating...

Q: Ballack Co.’s common stock currently sells for $46.

Ballack Co.’s common stock currently sells for $46.75 per share. The growth rate is a constant 12%, and the company has an expected dividend yield of 5%. The expected long-run dividend payout ratio is...

Q: Wingler Communications Corporation (WCC) produces premium stereo headphones that sell

Wingler Communications Corporation (WCC) produces premium stereo headphones that sell for $28.80 per set, and this year’s sales are expected to be 450,000 units. Variable production costs for the expe...

Q: Suppose a firm makes the following policy changes. If the change

Suppose a firm makes the following policy changes. If the change means that external non spontaneous financial requirements (AFN) will increase, indicate this with a (+); indicate a decrease with a (&...

Q: Southeastern Steel Company (SSC) was formed 5 years ago to

Southeastern Steel Company (SSC) was formed 5 years ago to exploit a new continuous casting process. SSC’s founders, Donald Brown and Margo Valencia, had been employed in the research department of a...

Q: Bowles Sporting Inc. is prepared to report the following income statement

Bowles Sporting Inc. is prepared to report the following income statement (shown in thousands of dollars) for the year 2009. Prior to reporting this income statement, the company wants to determine i...

Q: How would each of the following scenarios affect a firm’s cost of

How would each of the following scenarios affect a firm’s cost of debt, rd(1 – T); its cost of equity, rs; and its WACC? Indicate with a plus (+), a minus (â&...

Q: Use a spreadsheet model to forecast the financial statements in Problems 17

Use a spreadsheet model to forecast the financial statements in Problems 17-13 and 17-14. Data from Problem 17-13 Morrissey Technologies Inc.’s 2008 financial statements are shown h...

Q: Sue Wilson, the new financial manager of New World Chemicals (

Sue Wilson, the new financial manager of New World Chemicals (NWC), a California producer of specialized chemicals for use in fruit orchards, must prepare a formal financial forecast for 2009. NWC&aci...

Q: Morrissey Technologies Inc.’s 2008 financial statements are shown here.

Morrissey Technologies Inc.’s 2008 financial statements are shown here. Suppose that in 2009, sales increase by 10% over 2008 sales. The firm currently has 100,000 shares outstandi...

Q: Colgate-Palmolive Company has just paid an annual dividend of $

Colgate-Palmolive Company has just paid an annual dividend of $0.96. Analysts are predicting an 11% per year growth rate in earnings over the next five years. After then, Colgate’s earnings are expect...

Q: Using the information in the table below, calculate this company’s:

Using the information in the table below, calculate this company’s: a. Internal growth rate. b. Sustainable growth rate. c. Sustainable growth rate if it pays out 40% of its net inco...

Q: Your firm has an ROE of 12%, a payout ratio of

Your firm has an ROE of 12%, a payout ratio of 25%, $600,000 of stockholders’ equity, and $400,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you nee...

Q: For the next fiscal year, you forecast net income of $

For the next fiscal year, you forecast net income of $50,000 and ending assets of $500,000. Your firm’s payout ratio is 10%. Your beginning stockholders’ equity is $300,000 and your beginning total li...

Q: Assume your beginning debt in Problem 2 is $100,000

Assume your beginning debt in Problem 2 is $100,000. What amount of equity and what amount of debt would you need to issue to cover the net new financing in order to keep your debt-equity ratio consta...

Q: Assume that an average firm in the office supply business has a

Assume that an average firm in the office supply business has a 6% profit margin, a 40% debt/assets ratio, a total assets turnover of 2 times, and a dividend payout ratio of 40%. Is it true that if su...

Q: Owen's Electronics has 9 operating plants in seven southwestern states. Sales

Owen's Electronics has 9 operating plants in seven southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales to that of previous y...

Q: The Manning Company has financial statements as shown below, which are

The Manning Company has financial statements as shown below, which are representative of the company's historical average. The firm is expecting a 20 percent increase in sales next year, and managemen...

Q: Conn Man's Shops, Inc., a national clothing chain, had

Conn Man's Shops, Inc., a national clothing chain, had sales of $300 million last year. The business has a steady net profit margin of 8 percent and a dividend payout ratio of 25 percent. The balance...

Q: You are considering investing in Annie’s Eatery. You have been able

You are considering investing in Annie’s Eatery. You have been able to locate the following information on the firm: Total assets are $40 million, accounts receivable are $6.0 million, ACP is 30 days,...

Q: You have located the following information on Webb’s Heating & Air Conditioning

You have located the following information on Webb’s Heating & Air Conditioning: debt ratio is 54 percent, capital intensity ratio is 1.10 times, profit margin is 12.5 percent, and dividend payout rat...

Q: Last year, Lakesha’s Lounge Furniture Corporation had an ROA of 7

Last year, Lakesha’s Lounge Furniture Corporation had an ROA of 7.5 percent and a dividend payout ratio of 25 percent. What is the internal growth rate?

Q: Last year, Lakesha’s Lounge Furniture Corporation had an ROE of 17

Last year, Lakesha’s Lounge Furniture Corporation had an ROE of 17.5 percent and a dividend payout ratio of 20 percent. What is the sustainable growth rate?

Q: Suppose a firm pays total dividends of $500,000 out

Suppose a firm pays total dividends of $500,000 out of net income of $2 million. What would the firm’s payout ratio be?

Q: Suppose a firm pays total dividends of $750,000 out

Suppose a firm pays total dividends of $750,000 out of net income of $5 million. What would the firm’s payout ratio be?

Q: The financial statements of Marks and Spencer plc (M&S

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Repo...

Q: The financial statements of P&G are presented in Appendix 5B

The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to these financial statements and the...

Q: On January 1, 2012, Agassi Corporation had the following stockholders’

On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding) ……….. $600,000 Paid-in Capital in Excess of P...

Q: On January 1, 2012, Agassi Corporation had the following stockholders’

On January 1, 2012, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding) ……….. $600,000 Paid-in Capital in Excess of P...

Q: The financial statements of Marks and Spencer plc (M&S

The financial statements of Marks and Spencer plc (M&S) are available at the book’s companion website or can be accessed at http://corporate.marksandspencer.com/documents/publications/2010/Annual_Repo...

Q: The financial statements of P&G are presented in Appendix 5B

The financial statements of P&G are presented in Appendix 5B or can be accessed at the book’s companion website, www.wiley.com/college/kieso. Instructions Refer to these financial statements and the...

Q: Condensed comparative income statements of Señorina Panchos, a Mexican restaurant chain

Condensed comparative income statements of Señorina Panchos, a Mexican restaurant chain, for the years 2009 through 2011 are presented in Exhibit 9-18 (000,000’s pesos...

Q: Look again at the financial forecasts for Growth-Tech given in

Look again at the financial forecasts for Growth-Tech given in Table 4.4. This time assume you know that the opportunity cost of capital is r = .12 (discard the .09...

Q: The financial statements of Eagle Sport Supply are shown in Table 29

The financial statements of Eagle Sport Supply are shown in Table 29.18. For simplicity, “Costs” include interest. Assume that Eagle’s...

Q: a. What is the internal growth rate of Eagle Sport (

a. What is the internal growth rate of Eagle Sport (see Problem 24) if the dividend payout ratio is fixed at 60% and the equity-to-asset ratio is fixed at two-thirds? b. What is the sustainable growth...

Q: What is the maximum possible growth rate for Archimedes (see Problem

What is the maximum possible growth rate for Archimedes (see Problem 10) if the payout ratio is set at 50% and (a) no external debt or equity is to be issued? (b) the firm maintains a fixed debt rat...

Q: Let’s look at Dick’s Sporting Goods (Dick’s) one last time

Let’s look at Dick’s Sporting Goods (Dick’s) one last time. Think about Dick’s and how everything you’ve learned comes together. Think about accountants reporting what Dick’s has, where it got its mon...

Q: Suppose you just bought a convertible bond at its par value.

Suppose you just bought a convertible bond at its par value. Your broker gives you information on the bond’s conversion ratio, coupon rate, maturity, years of call protection, and the yield on nonconv...

Q: Presented here are summarized data from the balance sheets and income statements

Presented here are summarized data from the balance sheets and income statements of Wiper, Inc.: Required: a. Calculate return on investment, based on net income and average total assets, for 2011 a...

Q: The commercial loan officers did not list the dividend payout ratio as

The commercial loan officers did not list the dividend payout ratio as a highly significant ratio, but they did indicate that the dividend payout ratio appeared frequently in loan agreements. Speculat...

Q: McCormac Co. wishes to maintain a growth rate of 12 percent

McCormac Co. wishes to maintain a growth rate of 12 percent a year, a debt–equity ratio of 1.20, and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .75. What...

Q: A firm wishes to maintain a growth rate of 11.5

A firm wishes to maintain a growth rate of 11.5 percent and a dividend payout ratio of 30 percent. The ratio of total assets to sales is constant at .60, and profit margin is 6.2 percent. If the firm...

Q: A firm wishes to maintain an internal growth rate of 7 percent

A firm wishes to maintain an internal growth rate of 7 percent and a dividend payout ratio of 25 percent. The current profit margin is 5 percent, and the firm uses no external financing sources. What...

Q: Nearside, Inc., wishes to maintain a growth rate of 12

Nearside, Inc., wishes to maintain a growth rate of 12 percent per year and a debt–equity ratio of .30. Profit margin is 6.70 percent, and the ratio of total assets to sales is constant at 1.35. Is th...

Q: The most recent financial statements for Throwing Copper Co. are shown

The most recent financial statements for Throwing Copper Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a const...

Q: Consider the following income statement for the Heir Jordan Corporation:

Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the d...

Q: Assume that you have been given the responsibility to invest some funds

Assume that you have been given the responsibility to invest some funds in the stock market to provide an annuity to an individual who has just retired. Explain how you might use the dividend yield an...

Q: Electronic Timing, Inc. (ETI), is a small company

Electronic Timing, Inc. (ETI), is a small company founded 15 years ago by electronics engineers Tom Miller and Jessica Kerr. ETI manufactures integrated circuits to capitalize on the complex mixed-sig...

Q: Amanda Monaco has just inherited her father’s company. Prior to his

Amanda Monaco has just inherited her father’s company. Prior to his death, Mr. Monaco was the sole stockholder, and he left the entire company to his only daughter. Although Amanda h...

Q: Refer to the financial statements and other data in Problem 14–

Refer to the financial statements and other data in Problem 14–12A. Assume that you are an account executive for a large brokerage house and that one of your clients has asked for a...

Q: You have just been hired as a loan officer at Slippery Rock

You have just been hired as a loan officer at Slippery Rock State Bank. Your supervisor has given you a file containing a request from Lydex Company, a manufacturer of safety helmets, for a $3,000,000...

Q: In the right-hand column below, certain financial ratios are

In the right-hand column below, certain financial ratios are listed. To the left of each ratio is a business transaction or event relating to the operating activities of Delta Company (each transactio...

Q: Paul Ward is interested in the stock of Pecunious Products, Inc

Paul Ward is interested in the stock of Pecunious Products, Inc. Before purchasing the stock, Mr. Ward would like your help in analyzing the data that are available to him as follows: Mr. Ward would...

Q: The financial statements of Columbia Sportswear Company are presented in Appendix B

The financial statements of Columbia Sportswear Company are presented in Appendix B. Financial statements of VF Corporation are presented in Appendix C. Instructions (a) Based on the information in th...

Q: The financial statements of Amazon.com, Inc. are presented

The financial statements of Amazon.com, Inc. are presented in Appendix D. Financial statements of Wal-Mart Stores, Inc. are presented in Appendix E. Instructions (a) Based on the information in these...

Q: On January 1, 2017, Tacoma Corporation had these stockholders’ equity

On January 1, 2017, Tacoma Corporation had these stockholders’ equity accounts. Common Stock ($10 par value, 70,000 shares issued and outstanding) $700,000 Paid-in Capital in Excess of Par Value...

Q: Hans Miken, president of Miken Corporation, believes that it is

Hans Miken, president of Miken Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year, net income was $600,000, a...

Q: The following financial information is available for Flintlock Corporation. /

The following financial information is available for Flintlock Corporation. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2017 and 2016. Comm...

Q: Suppose the following financial information is available for Walgreen Company.

Suppose the following financial information is available for Walgreen Company. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2017 and 2016. C...

Q: Hollie Company has stockholders’ equity of $400,000 and net

Hollie Company has stockholders’ equity of $400,000 and net income of $72,000. It has a payout ratio of 18% and a return on assets of 20%. How much did Hollie pay in cash dividends, and what were its...

Q: Define each of the following terms: a. Operating plan

Define each of the following terms: a. Operating plan; financial plan b. Spontaneous liabilities; profit margin; payout ratio c. Additional funds needed (AFN); AFN equation; capital intensity ratio...

Q: Suppose a firm makes the policy changes listed below. If

Suppose a firm makes the policy changes listed below. If a change means that external, nonspontaneous financial requirements (AFN) will increase, indicate this by a (+); indicate a decrease by a (()(...

Q: The Wei Corporation expects next year’s net income to be $15

The Wei Corporation expects next year’s net income to be $15 million. The firm’s debt ratio is currently 40%. Wei has $12 million of profitable investment opportunities, and it wishes to maintain its...

Q: Kendra Brown is analyzing the capital requirements for Reynolds Corporation for next

Kendra Brown is analyzing the capital requirements for Reynolds Corporation for next year. Kendra forecasts that Reynolds will need $15 million to fund all of its positive-NPV projects and her job is...

Q: Harris Company must set its investment and dividend policies for the coming

Harris Company must set its investment and dividend policies for the coming year. It has three independent projects from which to choose, each of which requires a $3 million investment. These projects...

Q: Broussard Skateboard’s sales are expected to increase by 15% from $

Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2015 to $9.2 million in 2016. Its assets totaled $5 million at the end of 2015. Broussard is already at full capacity, s...

Q: Maggie’s Muffins Inc. generated $5,000,000 in

Maggie’s Muffins Inc. generated $5,000,000 in sales during 2015, and its year-end total assets were $2,500,000. Also, at year-end 2015, current liabilities were $1,000,000, consisting of $300,000 of n...

Q: The Booth Company’s sales are forecasted to double from $1,

The Booth Company’s sales are forecasted to double from $1,000 in 2015 to $2,000 in 2016.Here is the December 31, 2015, balance sheet: Booth’s fixed assets were use...

Q: Upton Computers makes bulk purchases of small computers, stocks them in

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set...

Q: As your first week at Henley Manufacturing Inc. draws to a

As your first week at Henley Manufacturing Inc. draws to a close, you find a memorandum on your desk from the company’s CEO. The memo outlines sales and earnings goals for next year: Sales are expecte...

Q: Shinedown, Inc., wishes to maintain a growth rate of 12 

Shinedown, Inc., wishes to maintain a growth rate of 12 percent per year and a debt–equity ratio of .35. Profit margin is 4.9 percent, and the ratio of total assets to sales is constant at .75. Is thi...

Q: The most recent financial statements for Wise Co. are shown here

The most recent financial statements for Wise Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 30 percent dividend payout ratio and a constant debt&aci...

Q: If the Hunter Corp. has a ROE of 12 percent and

If the Hunter Corp. has a ROE of 12 percent and a payout ratio of 15 percent, what is its sustainable growth rate?

Q: The Wintergrass Company has an ROE of 11.4 percent and

The Wintergrass Company has an ROE of 11.4 percent and a payout ratio of 25 percent. a. What is the company’s sustainable growth rate? b. Can the company’s actual growth rate be different from its sus...

Q: Now suppose the firm in question #9 has a payout ratio

Now suppose the firm in question #9 has a payout ratio of 30 percent. Given the earnings retention, what will be next year’s dividend, at what rate will the firm be able to grow the dividend, and what...

Q: What is the value of an all-equity firm that:

What is the value of an all-equity firm that: a. has a dividend payout ratio of 100 percent b. is expected to generate net income each year (forever) of $1 million, and c. has a required equity return...

Q: The Sharpe Co. just paid a dividend of $1.

The Sharpe Co. just paid a dividend of $1.60 per share of stock. Its target payout ratio is 40 percent. The company expects to have earnings per share of $5.10 one year from now. a. If the adjustment...

Q: Pecunious Products, Inc.’s financial results for the past three

Pecunious Products, Inc.’s financial results for the past three years are summarized below: Your boss has asked you to review these results and then answer the following questions:...

Q: Markus Company’s common stock sold for $2.75 per share

Markus Company’s common stock sold for $2.75 per share at the end of this year. The company paid a common stock dividend of $0.55 per share this year. It also provided the following...

Q: Handy and Harman, a leading fabricator of precious metal alloys,

Handy and Harman, a leading fabricator of precious metal alloys, pays out only 23% of its earnings as dividends. The average dividend payout ratio for metal fabricating firms is 45%. The average growt...

Q: The following is a regression of dividend payout ratios on the risk

The following is a regression of dividend payout ratios on the risk and ln(market capitalization: in millions) of chemical firms: Dividend Payout Ratio = 0.14 + 0.05 [ln(Market Capitalization in Mi...

Q: The following regression was run using all NYSE firms in 1995

The following regression was run using all NYSE firms in 1995 YIELD = 0.0478 − 0.0157 BETA + 0.0000008 MKTCAP + 0.006797 DBTRATIO + 0.0002 ROE − 0.09 NCEX∕TA R 2 = 12.88% Where BET...

Q: Mike Haden, president of Haden Corporation, believes that it is

Mike Haden, president of Haden Corporation, believes that it is a good practice for a company to maintain a constant payout of dividends relative to its earnings. Last year, net income was $600,000, a...

Q: Question: On January 1, 2014, Everett Corporation had these

On January 1, 2014, Everett Corporation had these stockholders’ equity accounts. Common Stock ($10 par value, 70,000 shares issued and outstanding) ………..$700,000 Paid-in Capital in Excess of Par Val...

Q: On January 1, 2014, Lamar Corporation had these stockholders’ equity

On January 1, 2014, Lamar Corporation had these stockholders’ equity accounts. Common Stock ($20 par value, 80,000 shares issued and outstanding) ………. $1,600,000 Paid-in Capital in Excess of Par Val...

Q: The financial statements of The Hershey Company are presented in Appendix B

The financial statements of The Hershey Company are presented in Appendix B, following the financial statements for Tootsie Roll in Appendix A. Appendix A: Appendix B: Instructions: (a) Based on...

Q: Suppose the following financial information is available for Walgreen Company.

Suppose the following financial information is available for Walgreen Company. Instructions: Calculate the payout ratio and return on common stockholders’ equity for 2014 and 2013....

Q: The following financial information is available for Whitlock Corporation.

The following financial information is available for Whitlock Corporation. Instructions: Calculate the payout ratio and return on common stockholders’ equity for 2014 and 2013. Com...

Q: Voorhees Company has stockholders’ equity of $400,000 and net

Voorhees Company has stockholders’ equity of $400,000 and net income of $72,000. It has a payout ratio of 18% and a return on assets of 20%. How much did Voorhees pay in cash dividends, and what were...

Q: Walmart makes significant investments in operating capacity, primarily via investments in

Walmart makes significant investments in operating capacity, primarily via investments in property, plant, and equipment, but also via investments in wholly and partially owned subsidiaries. Walmart a...

Q: Exhibit 14.10 presents data on market-to-book

Exhibit 14.10 presents data on market-to-book (MB) ratios, ROCE, the cost of equity capital, and price-earnings (PE) ratios for seven pharmaceutical companies. (Note that PE ratios for these firms typ...

Q: Final earnings estimates for Chilean Health Spa & Fitness Center have been

Final earnings estimates for Chilean Health Spa & Fitness Center have been prepared for the CFO of the company and are shown in the following table. The firm has 7,500,000 shares of common stock outst...

Q: Divac Company has developed a statement of stockholders’ equity for the year

Divac Company has developed a statement of stockholders’ equity for the year 2017 as follows: Divac’s preferred stock is $100 par, 8% stock. If the stock is liqui...

Q: Assume an investor uses the constant-growth DVM to value a

Assume an investor uses the constant-growth DVM to value a stock. Listed below are various situations that could affect the computed value of a stock. Look at each one of these individually and indica...

Q: Wally Wilson is a commercial artist who makes a good living by

Wally Wilson is a commercial artist who makes a good living by doing freelance work—mostly layouts and illustrations—for local ad agencies and major institutional c...

Q: Following is a sample of 11 Level-I CFA exam questions

Following is a sample of 11 Level-I CFA exam questions that deal with many topics covered in Chapters 6, 7, 8, and 9 of this text, including the use of financial ratios, various stock valuation models...

Q: Find the EPS, P/E ratio, and dividend yield

Find the EPS, P/E ratio, and dividend yield of a company that has five million shares of common stock outstanding (the shares trade in the market at $25), earns 10% after taxes on annual sales of $150...

Q: The following table lists the 2015 and 2016 financial statements for Otago

The following table lists the 2015 and 2016 financial statements for Otago Bay Marine Motors, a major manufacturer of top-of-the-line outboard motors. a. On the basis of the information provided,...

Q: The Amherst Company has net profits of $10 million, sales

The Amherst Company has net profits of $10 million, sales of $150 million, and 2.5 million shares of common stock outstanding. The company has total assets of $75 million and total stockholders’ equit...

Q: Jack Arnold is a resident of Lubbock, Texas, where he

Jack Arnold is a resident of Lubbock, Texas, where he is a prosperous rancher and businessman. He has also built up a sizable portfolio of common stock, which, he believes, is due to the fact that he...

Q: An investor estimates that next year’s sales for Dursley’s Hotels, Inc

An investor estimates that next year’s sales for Dursley’s Hotels, Inc., should amount to about $100 million. The company has five million shares outstanding, generates a net profit margin of about 10...

Q: A particular company currently has sales of $250 million; sales

A particular company currently has sales of $250 million; sales are expected to grow by 20% next year (year 1). For the year after next (year 2), the growth rate in sales is expected to equal 10%. Ove...

Q: Assume you obtain the following information about a certain company:

Assume you obtain the following information about a certain company: Total assets ……………………………………………………………………. $50,000,000 Total equity ……………………………………………………………………. $25,000,000 Net income …………………………………...

Q: The MedTech Company recently reported net profits after taxes of $15

The MedTech Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million per year. a. Compute th...

Q: Consolidated Software doesn’t currently pay any dividends but is expected to start

Consolidated Software doesn’t currently pay any dividends but is expected to start doing so in four years. That is, Consolidated will go three more years without paying dividends and then is expected...

Q: Good stuff Corporation has total equity of $500 million and 100

Good stuff Corporation has total equity of $500 million and 100 million shares outstanding. Its ROE is 15%. The dividend payout ratio is 33.3%. Calculate the company’s dividends per share (round to th...

Q: The following is ABC Inc.’s balance sheet (in thousands

The following is ABC Inc.’s balance sheet (in thousands): Also, sales equal $500, cost of goods sold equals $360, interest payments equal $62, taxes equal $56, and net income equal...

Q: Calculate the following ratios for Lake of Egypt Marina Inc. as

Calculate the following ratios for Lake of Egypt Marina Inc. as of year-end 2019. Using these ratios for Lake of Egypt Marina Inc. and the industry, what can you conclude about Lake of Egypt Marina&...

Q: The financial statements of M&S are presented in Appendix E

The financial statements of M&S are presented in Appendix E. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to M&S’s f...

Q: On January 1, 2017, Agassi Corporation had the following stockholders’

On January 1, 2017, Agassi Corporation had the following stockholders’ equity accounts. Common Stock ($10 par value, 60,000 shares issued and outstanding)……$600,000 Paid-in Capital in Excess of Par—C...

Q: The financial statements of P&G are presented in Appendix B

The financial statements of P&G are presented in Appendix B. The company’s complete annual report, including the notes to the financial statements, is available online. Instructions Refer to P&G’s...

Q: Tomey Supply Company’s financial statements for the most recent fiscal year are

Tomey Supply Company’s financial statements for the most recent fiscal year are shown below. The company management projects that sales will increase by 20 percent next year. Assume...

Q: Rowan Company has a net profit margin of 8.3 percent

Rowan Company has a net profit margin of 8.3 percent, debt ratio of 45 percent, total assets of $4,157,550, and sales of $6,852,654. If the company has a dividend payout ratio of 67 percent, what is i...

Q: Refer to the information for Rowan Company in Problem 19.23

Refer to the information for Rowan Company in Problem 19.23. The firm’s management desires a sustainable growth rate (SGR) of 10 percent but does not wish to change the company’s level of debt or its...

Q: Rocky Sales, Inc., has current sales of $1,

Rocky Sales, Inc., has current sales of $1,215,326 and net income of $211,253. It also has a debt ratio of 25 percent and a dividend payout ratio of 75 percent. The company’s total assets are $712,455...

Q: Ellicott Textile Mills management has reported the following financial information for the

Ellicott Textile Mills management has reported the following financial information for the year ended September 30, 2017. The company generated a net income of $915, 366 on a net profit margin of 6.4...

Q: Maryland Micro Brewers generated revenues of $12,125,800

Maryland Micro Brewers generated revenues of $12,125,800 with a 72 percent capital intensity ratio during the year ended September 30, 2017. Its net income was $873,058. With the introduction of a hal...

Q: Ritchie Marble Company has total assets of $12,899,

Ritchie Marble Company has total assets of $12,899,450, sales of $18,174,652, and net income of $4,589,774. Management expects sales to grow by 25 percent next year. All assets and costs (including ta...

Q: Capstone Marketing Group has total assets of $5,568,

Capstone Marketing Group has total assets of $5,568,000, sales of $3,008,725, and net income of $822,000. The company expects its sales to grow by 12 percent next year. All assets and costs (includin...

Q: Given the data for Capstone Marketing Group in Problem 19.32

Given the data for Capstone Marketing Group in Problem 19.32, what would Capstone’s payout ratio have to be for the firm’s EFN to be zero? Refer to the given data for Capstone Marketing Group in Prob...

Q: Munson Communications Company has just reported earnings for the year ended June

Munson Communications Company has just reported earnings for the year ended June 30, 2017. Below are the firm’s income statement and balance sheet. The company had a 55 percent divid...

Q: Goodwin Corp. has revenues of $12,112,659

Goodwin Corp. has revenues of $12,112,659, costs of $9,080,545, interest payments of $412,375, and a tax rate of 34 percent. It paid dividends of $1,025,000 to its stockholders. What are the firm’s di...

Q: Edgefield Excavation Company has total assets of $4,976,

Edgefield Excavation Company has total assets of $4,976,456, sales of $1,225,700, and net income of $587,000. The company’s management expects sales to grow by 9 percent next year. All costs (includin...

Q: Northwood Corp. has a dividend payout ratio of 60 percent,

Northwood Corp. has a dividend payout ratio of 60 percent, return on equity of 14.5 percent, total assets of $11,500,450, and equity of $4,652,125. Calculate the firm’s internal rate of growth (IGR)?...

Q: Renewal Company has net income of $1.25 million and

Renewal Company has net income of $1.25 million and a dividend payout ratio of 35 percent. It currently has equity of $2,875,223. What is the firm’s sustainable growth rate?

Q: If Newell Corp. has a ROE of 13.7 percent

If Newell Corp. has a ROE of 13.7 percent and a dividend payout ratio of 32 percent, what is its sustainable growth rate?

Q: Fantasy Travel Company has a return on equity of 17.5

Fantasy Travel Company has a return on equity of 17.5 percent, a total equity/total assets ratio of 65 percent, and a dividend payout ratio of 75 percent. What is the company’s internal growth rate?

Q: How does the dividend payout ratio affect the amount of funds needed

How does the dividend payout ratio affect the amount of funds needed to finance growth?

Q: Mondrian plc is a new business that aims to maximize the wealth

Mondrian plc is a new business that aims to maximize the wealth of its shareholders. The board of directors is currently trying to decide upon the most appropriate dividend policy to adopt for the bus...

Q: Ji Wu of Troy, New York, has $5,

Ji Wu of Troy, New York, has $5,000 that he wants to invest in the stock market. Ji is in college on a scholarship and does not plan to use the $5,000 or any dividend income for another five years, wh...

Q: Sig, Inc., wishes to maintain a growth rate of 12

Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .43. The profit margin is 5.9 percent, and the ratio of total assets to sales is constant at 1.80. Is this...

Q: The most recent financial statements for Alexander Co. are shown

The most recent financial statements for Alexander Co. are shown here:Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-...

Q: In practice, a common way to value a share of

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ra...

Q: Consider the following income statement for the Heir Jordan Corporation:

Consider the following income statement for the Heir Jordan Corporation:A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the divi...

Q: From the previous two questions, prepare a pro forma balance

From the previous two questions, prepare a pro forma balance sheet showing EFN, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio.Data...

Q: If A7X Co. has an ROA of 7.6 percent and

If A7X Co. has an ROA of 7.6 percent and a payout ratio of 25 percent, what is its internal growth rate?

Q: If Synyster Corp. has an ROE of 14.7 percent and

If Synyster Corp. has an ROE of 14.7 percent and a payout ratio of 30 percent, what is itss ustainable growth rate?

Q: Ramble On Co. wishes to maintain a growth rate of

Ramble On Co. wishes to maintain a growth rate of 12 percent per year, a debt-equity ratio of .90, and a dividend payout ratio of 25 percent. The ratio of total assets to sales is constant at 0.85. Wh...

Q: A firm wishes to maintain an internal growth rate of

A firm wishes to maintain an internal growth rate of 7.1 percent and a dividend payout ratio of 25 percent. The current profit margin is 6.5 percent, and the firm uses no external financing sources. W...

Q: From the previous two questions, prepare a pro forma balance

From the previous two questions, prepare a pro forma balance sheet showing EFN, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio.Data...

Q: If A7X Co. has an ROA of 7.6 percent and

If A7X Co. has an ROA of 7.6 percent and a payout ratio of 25 percent, what is its internal growth rate?

Q: If Synyster Corp. has an ROE of 14.7 percent and

If Synyster Corp. has an ROE of 14.7 percent and a payout ratio of 30 percent, what is itss ustainable growth rate?

Q: Ramble On Co. wishes to maintain a growth rate of

Ramble On Co. wishes to maintain a growth rate of 12 percent per year, a debt-equity ratio of .90, and a dividend payout ratio of 25 percent. The ratio of total assets to sales is constant at 0.85. Wh...

Q: A firm wishes to maintain an internal growth rate of

A firm wishes to maintain an internal growth rate of 7.1 percent and a dividend payout ratio of 25 percent. The current profit margin is 6.5 percent, and the firm uses no external financing sources. W...

Q: The following financial information is available for Flintlock Corporation.

The following financial information is available for Flintlock Corporation. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2020 and 2019. Com...

Q: Suppose the following financial information is available for Walgreen Company.

Suppose the following financial information is available for Walgreen Company. Instructions Calculate the payout ratio and return on common stockholders’ equity for 2020 and 2019....

Q: Modern Furniture Company had finally arrived at the point where it had

Modern Furniture Company had finally arrived at the point where it had a sufficient excess cash flow of $4.8 million to consider paying a dividend. It had 3 million shares of stock outstanding and was...

Q: Compute Ke and Kn under the following circumstances: a.

Compute Ke and Kn under the following circumstances: a. D1 = $5.00, P0 = $70, g = 8%, F = $7.00. b. D1 = $0.22, P0 = $28, g = 7%, F = $2.50. c. E1 (earnings at the end of period one) = $7, payout rati...

Q: Business has been good for Keystone Control Systems, as indicated by

Business has been good for Keystone Control Systems, as indicated by the four-year growth in earnings per share. The earnings have grown from $1.00 to $1.63. a. Use Appendix A at the back of the text...

Q: The Hastings Sugar Corporation has the following pattern of net income each

The Hastings Sugar Corporation has the following pattern of net income each year, and associated capital expenditure projects. The firm can earn a higher return on the projects than the stockholders c...

Q: A financial analyst is attempting to assess the future dividend policy of

A financial analyst is attempting to assess the future dividend policy of Environmental Systems by examining its life cycle. She anticipates no payout of earnings in the form of cash dividends during...

Q: Owen’s Electronics has nine operating plants in seven Southwestern states. Sales

Owen’s Electronics has nine operating plants in seven Southwestern states. Sales for last year were $100 million, and the balance sheet at year-end is similar in percentage of sales...

Q: The Manning Company has financial statements as shown next, which are

The Manning Company has financial statements as shown next, which are representative of the company’s historical average. The firm is expecting a 35 percent increase in sales next ye...

Q: Conn Man’s Shops, a national clothing chain, had sales of

Conn Man’s Shops, a national clothing chain, had sales of $350 million last year. The business has a steady net profit margin of 9 percent and a dividend payout ratio of 25 percent....

Q: The Blinkelman Corporation has just announced that it plans to introduce a

The Blinkelman Corporation has just announced that it plans to introduce a new solar panel that will greatly reduce the cost of solar energy. As a result, analysts now expect the company’s earnings, c...

Q: The firm ’ s dividend payout ratio is 30 percent. What

The firm ’ s dividend payout ratio is 30 percent. What was the firm ’ s year 2 net income?

Q: A firm had retained earnings of $18,000 at

A firm had retained earnings of $18,000 at the beginning of the year. Its net income for the year was $14,300, and its dividend payout ratio is 30 percent. What are its retained earnings at the end o...

Q: Use the average dividend payout ratio from years 1 and 2,

Use the average dividend payout ratio from years 1 and 2, and the forecast net income figure from Practice Problem 29, to estimate the total amount of dividends that will be paid by the company in yea...

Q: Apex Corporation is considering the purchase of Pinnacle Company in a stockfor

Apex Corporation is considering the purchase of Pinnacle Company in a stockfor-stock exchange. Selected data on the two companies are shown in the following table: Assume that there are no synergist...

Q: Apex Financial Ltd. is concerned about the impact of errors in

Apex Financial Ltd. is concerned about the impact of errors in its estimates of the future dividend payout ratio for Barnett Steel Corporation. Assume that the current dividend is $1, ROE is fixed at...

Q: Selkirk Inc. has an expected profit margin of 10 percent,

Selkirk Inc. has an expected profit margin of 10 percent, turnover ratio of 1.8, and a leverage ratio of 0.3. The leading EPS is $2.50 and the firm uses a dividend payout ratio of 35 percent. The requ...

Q: Apex Financial Ltd. has completed a fundamental analysis of Spark Energy

Apex Financial Ltd. has completed a fundamental analysis of Spark Energy Inc. Spark Energy is a young company and expects to invest heavily in facilities and research and development during the next f...

Q: ToolWerks Company is expected to earn $12 million next year.

ToolWerks Company is expected to earn $12 million next year. There are 4 million shares outstanding and the company uses a dividend payout ratio of 30 percent. The required rate of return for companie...

Q: 1. Park Recreational Vehicles Ltd. shares are currently selling for

1. Park Recreational Vehicles Ltd. shares are currently selling for $37.50 each. You bought 200 shares one year ago at $34 and received dividend payments of $1.50 per share. What was your total dollar...

Q: Parker Imports Ltd. is expected to pay a $2 dividend

Parker Imports Ltd. is expected to pay a $2 dividend in one year. The required rate of return is 9 percent. The firm uses a dividend payout ratio of 25 percent. Calculate the leading P/E ratio in the...

Q: Broussard Skateboard’s sales are expected to increase by 15% from $

Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2016 to $ 9.2 million in 2017. Its assets totaled $5 million at the end of 2016. Broussard is already at full capacity,...

Q: Integrated Waveguide Technologies (IWT) is a 6-year-

Integrated Waveguide Technologies (IWT) is a 6-year-old company founded by Hunt Jackson and David Smithfield to exploit metamaterial plasmonic technology to develop and manufacture miniature microwave...

Q: Refer to Problem 12-1. What would be the additional

Refer to Problem 12-1. What would be the additional funds needed if the company’s year end 2016 assets had been $7 million? Assume that all other numbers, including sales, are the same as in Problem 1...

Q: Refer to Problem 12-1. Return to the assumption that

Refer to Problem 12-1. Return to the assumption that the company had $5 million in assets at the end of 2016, but now assume that the company pays no dividends. Under these assumptions, what would be...

Q: Maggie’s Muffins Bakery generated$5,000,000 in sales

Maggie’s Muffins Bakery generated$5,000,000 in sales during 2016, and its year-end total assets were $2,500,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of...

Q: The Booth Company’s sales are forecasted to double from $1,

The Booth Company’s sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet: Booth’s fixed assets were...

Q: Upton Computers makes bulk purchases of small computers, stocks the min

Upton Computers makes bulk purchases of small computers, stocks the min conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set...

Q: Calculate the cash dividend paid per share for each of the firms

Calculate the cash dividend paid per share for each of the firms in the following table using their earnings per share and dividend payout ratio:

Q: The Welmar Corporation operates membership warehouses that offer a wide variety of

The Welmar Corporation operates membership warehouses that offer a wide variety of branded and private-label products in no-frills, self-service warehouse facilities. In 2016, the company paid total c...

Q: Solarpower Systems expects to earn $20 per share this year and

Solarpower Systems expects to earn $20 per share this year and intends to pay out $8 in dividends to shareholders and retain $12 to invest in new projects with an expected return on equity of 20 perce...

Q: The dividend payout ratio equals dividends paid divided by earnings. How

The dividend payout ratio equals dividends paid divided by earnings. How would you expect this ratio to behave during a recession? What about during an economic boom?

Q: Harte Textiles Inc., a maker of custom upholstery fabrics, is

Harte Textiles Inc., a maker of custom upholstery fabrics, is concerned about preserving the wealth of its stockholders during a cyclical downturn in the home furnishings business. The company has mai...

Q: As president of Young’s of California, a large clothing chain,

As president of Young’s of California, a large clothing chain, you have just received a letter from a major stockholder. The stockholder asks about the company’s dividend policy. In fact, the stockhol...

Q: Bennett Farm Equipment Sales Inc. is in a highly cyclical business

Bennett Farm Equipment Sales Inc. is in a highly cyclical business. Although the firm has a target payout ratio of 25%, its board realizes that strict adherence to that ratio would result in a fluctua...

Q: Over the past 10 years, a firm has had the earnings

Over the past 10 years, a firm has had the earnings per share shown in the following table. a. If the firm’s dividend policy were based on a constant payout ratio of 40% for all ye...

Q: The board of Kopi Industries is considering a new dividend policy that

The board of Kopi Industries is considering a new dividend policy that would set dividends at 60% of earnings. The recent past has witnessed earnings per share (EPS) and dividends paid per share as sh...

Q: Calculate the cost of equity using the constant growth DDM given the

Calculate the cost of equity using the constant growth DDM given the following: current dividend $3; payout ratio 0.5 (assume it is not changing); ROE 12%; and the current market price of the stock $2...

Q: A firm has a dividend yield of 3.8 percent and

A firm has a dividend yield of 3.8 percent and a payout ratio of 36 percent. If its earnings are $22 million and there are 6 million shares outstanding, what is the price per share?

Q: Integrated Waveguide Technologies (IWT) is a 6-yearold company

Integrated Waveguide Technologies (IWT) is a 6-yearold company founded by Hunt Jackson and David Smithfield to exploit meta material plasmonic technology to develop and manufacture miniature microwave...

Q: Refer to Problem 9-1. What would be the additional

Refer to Problem 9-1. What would be the additional funds needed if the company’s year-end 2018 assets had been $7 million? Assume that all other numbers, including sales, are the same as in Problem 9-...

Q: Refer to Problem 9-1. Return to the assumption that

Refer to Problem 9-1. Return to the assumption that the company had $5 million in assets at the end of 2018, but now assume that the company pays no dividends. Under these assumptions, what would be t...

Q: Maggie’s Muffins Bakery generated $5 million in sales during 2018,

Maggie’s Muffins Bakery generated $5 million in sales during 2018, and its year-end total assets were $2.5 million. Also, at year-end 2018, current liabilities were $1 million, consisting of $300,000...

Q: The Booth Company’s sales are forecasted to double from $1,

The Booth Company’s sales are forecasted to double from $1,000 in 2018 to $2,000 in 2019. Here is the December 31, 2018, balance sheet: Booth’s fixed assets were...

Q: Upton Computers makes bulk purchases of small computers, stocks them in

Upton Computers makes bulk purchases of small computers, stocks them in conveniently located warehouses, ships them to its chain of retail stores, and has a staff to advise customers and help them set...

Q: Broussard Skateboard’s sales are expected to increase by 15% from $

Broussard Skateboard’s sales are expected to increase by 15% from $8 million in 2018 to $9.2 million in 2019. Its assets totaled $5 million at the end of 2018. Broussard is already at full capacity, s...

Q: Kendra Brown is analyzing the capital requirements for Reynold Corporation for next

Kendra Brown is analyzing the capital requirements for Reynold Corporation for next year. Kendra forecasts that Reynold will need $15 million to fund all of its positive-NPV projects and her job is to...

Q: If a stock’s earnings per share is $2.00 what

If a stock’s earnings per share is $2.00 what will be the dividend per share if the payout ratio is 40%? If the following year’s earnings per share is $2.10 what will the payout ratio be if the firm w...

Q: Comparative statement of financial position accounts of Jensen Limited, which follows

Comparative statement of financial position accounts of Jensen Limited, which follows IFRS, appear below: Data from Jensen’s 2017 income statement follow: Additional information:...

Q: Original Octave Inc. (OOI) is a widely held,

Original Octave Inc. (OOI) is a widely held, publicly traded company that designs equipment for tuning musical instruments. Information about its shareholders’ equity is as follows....

Q: The outstanding share capital of Meadowcrest Corporation consists of 3,000

The outstanding share capital of Meadowcrest Corporation consists of 3,000 shares of preferred and 7,000 common shares for which $280,000 was received. The preferred shares carry a dividend of $7 per...

Q: Bradburn Corporation was formed five years ago through an initial public offering

Bradburn Corporation was formed five years ago through an initial public offering (IPO) of common shares. Daniel Brown, who owns 15% of the common shares, was one of the organizers of Bradburn and is...

Q: Guas Inc., a major retailer of bicycles and accessories, operates

Guas Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative state...

Q: If a management team wishes to boost the company's stock price,

If a management team wishes to boost the company's stock price, then it should consider actions to a. increase the S/Q rating on the company branded footwear, spend additional money on corporate citi...

Q: Managerial efforts to boost a company's stock price should entail such actions

Managerial efforts to boost a company's stock price should entail such actions as a. spending amounts on corporate citizenship and social responsibility that are above the industry average boosting th...

Q: If a management team wishes to boost the company's stock price,

If a management team wishes to boost the company's stock price, then it should consider pursuing actions to meet or beat the annual investor-expected EPS targets, raising the company's a. dividend ea...

Q: Harrison Hardware anticipates $2 million in net income next year and

Harrison Hardware anticipates $2 million in net income next year and a 20% participation in the firm’s dividend reinvestment plan. Management expects to spend $2.375 million on new capital projects,...

Q: The Argo Pamphlet Company’s dividend payout ratio is 35%. It is

The Argo Pamphlet Company’s dividend payout ratio is 35%. It is currently paying an annual dividend of $1.30. a. What is Argo’s EPS? b. What is the market price of Argo’s stock if its P/E ratio is 14...

Q: Randal Flapjack is a retired short-order cook living on a

Randal Flapjack is a retired short-order cook living on a fixed income in the state of Utopia where all financial markets are perfectly efficient. Randal has 20,000 shares of the Sugarcooky Corp., wh...

Q: The Dalmatian Corporation expects the following summarized financial results this year ($

The Dalmatian Corporation expects the following summarized financial results this year ($000) Use the EFR relation to estimate Dalmatian’s external funding requirements under the f...

Q: Fleming, Inc. had a dividend payout ratio of 25%

Fleming, Inc. had a dividend payout ratio of 25% this year that resulted in a payout of $80,000 in dividends. Return on sales (ROS) was 8% this year and is expected to increase to 9% next year. If F...

Q: Broxholme Industries has sales of $40 million, equity totaling $

Broxholme Industries has sales of $40 million, equity totaling $27.5 million and an ROS of 12%. The sustainable growth rate has been calculated at 10.9%. What dividend payout ratio was assumed in this...

Q: The Montauk Company has a dividend reinvestment plan in which shareholders owning

The Montauk Company has a dividend reinvestment plan in which shareholders owning 25% of its common stock participate. Last year the firm’s EPS was $4.20 and its payout ratio was 50%. There are 2 mi...

Q: Segwick Petroleum Ltd. has a dividend reinvestment plan in which new

Segwick Petroleum Ltd. has a dividend reinvestment plan in which new stock is issued to participating investors. Segwick's payout ratio is 40%, and 30% of stockholders participate in the plan. The f...

Q: Comparative SFP accounts of Jensen Limited, which follows IFRS, appear

Comparative SFP accounts of Jensen Limited, which follows IFRS, appear below: Data from Jensen's 2020 income statement follow: Additional information: 1. Equipment that cost $10,000 and was 40% dep...

Q: Guas Inc., a major retailer of bicycles and accessories, operates

Guas Inc., a major retailer of bicycles and accessories, operates several stores and is a publicly traded company. The company is currently preparing its statement of cash flows. The comparative state...

Q: Original Octave Inc. (OOI) is a widely held,

Original Octave Inc. (OOI) is a widely held, publicly traded company that designs equipment for tuning musical instruments. Information about its shareholders' equity is as follows. The preferred sha...

Q: Bradburn Corporation was formed five years ago through an initial public offering

Bradburn Corporation was formed five years ago through an initial public offering (IPO) of common shares. Daniel Brown, who owns 15% of the common shares, was one of the organizers of Bradburn and is...

Q: The treasurer of Reality Ltd has recently developed a computer model to

The treasurer of Reality Ltd has recently developed a computer model to help in the prediction of profits, statement of financial position and cash flows. By entering the expected sales figure and the...

Q: Let’s look at Dick’s Sporting Goods (Dick’s) one last time

Let’s look at Dick’s Sporting Goods (Dick’s) one last time. Think about Dick’s and how everything you’ve learned comes together. Think about accountants reporting what Dick’s has, where it got its mon...

Q: From the previous two questions, prepare a pro forma balance sheet

From the previous two questions, prepare a pro forma balance sheet showing EFN, assuming an increase in sales of 15 percent, no new external debt or equity financing, and a constant payout ratio. Pro...

Q: If Fairlane Co. has an ROA of 8.3 percent

If Fairlane Co. has an ROA of 8.3 percent and a payout ratio of 35 percent, what is its internal growth rate?

Q: If Premier Corp. has an ROE of 14.1 percent

If Premier Corp. has an ROE of 14.1 percent and a payout ratio of 25 percent, what is its sustainable growth rate?

Q: Gamgee Co. wishes to maintain a growth rate of 11 percent

Gamgee Co. wishes to maintain a growth rate of 11 percent per year, a debt-equity ratio of .75, and a dividend payout ratio of 25 percent. The ratio of total assets to sales is constant at .65. What p...

Q: A firm wishes to maintain an internal growth rate of 6.

A firm wishes to maintain an internal growth rate of 6.4 percent and a dividend payout ratio of 25 percent. The current profit margin is 5.7 percent, and the firm uses no external financing sources. W...

Q: The most recent financial statements for Crosby, Inc., follow.

The most recent financial statements for Crosby, Inc., follow. Sales for 2021 are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will...

Q: Tinsley, Inc., wishes to maintain a growth rate of 12

Tinsley, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .55. The profit margin is 6.2 percent, and the ratio of total assets to sales is constant at 1.05. Is...

Q: The most recent financial statements for Tran Co. are shown here

The most recent financial statements for Tran Co. are shown here: Assets and costs are proportional to sales. The company maintains a constant 40 percent dividend payout ratio and a constant debt-eq...

Q: Consider the following income statement for the Heir Jordan Corporation:

Consider the following income statement for the Heir Jordan Corporation: A 20 percent growth rate in sales is projected. Prepare a pro forma income statement assuming costs vary with sales and the d...

Q: In practice, a common way to value a share of stock

In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the terminal stock price using a benchmark PE rati...

Q: The stock of Nogro Corporation is currently selling for $10 per

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year...

Q: Chiptech, Inc., is an established computer chip firm with several

Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 a share last year, and just...

Q: a. What is the internal growth rate of Eagle Sport (

a. What is the internal growth rate of Eagle Sport (see Problem 25) if the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed at two-thirds? b. What is the sustainable growth...

Q: The financial statements of Eagle Sport Supply are shown in Table 29

The financial statements of Eagle Sport Supply are shown in Table 29.17. For simplicity, “Costs” include interest. Assume that Eagle’s assets are proportional to its sales. a. Find Eagle’s required ex...

Q: Go to the Apple website or to a financial source such as

Go to the Apple website or to a financial source such as Yahoo! Finance. a. Has Apple’s dividend increased from the initial quarterly rate of $2.65? b. What was the announcement date of the most recen...

Q: In the Data Analytics Cases in the previous chapter, you used

In the Data Analytics Cases in the previous chapter, you used Tableau to examine two (hypothetical) publicly traded companies: GPS Corporation and Tru, Inc. regarding the return on stockholders’ equit...

Q: While eating his Kellogg’s Frosted Flakes one January morning, Tony noticed

While eating his Kellogg’s Frosted Flakes one January morning, Tony noticed the following article in his local paper: Kellogg Company Reports Fourth-Quarter 2017 Results and Provides Guidance For 2018...

Q: The stock of Nogro Corporation is currently selling for $10 per

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year...

Q: Chiptech, Inc., is an established computer chip firm with several

Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $1 per share last year and just...

Q: Use the DuPont system and the following data to find return on

Use the DuPont system and the following data to find return on equity. Leverage ratio 2.2 Total asset turnover 2.0 Net profit margin 5.5% Dividend payout ratio 31.8%

Q: Financial information for American Eagle is presented in Appendix A at the

Financial information for American Eagle is presented in Appendix A at the end of the book, and financial information for Buckle is presented in Appendix B at the end of the book. Required: 1. Determi...

Q: 1. A share dividend involves the distribution of which of the

1. A share dividend involves the distribution of which of the following items: a. Shares of the company’s stock without receiving any payment in return b. Income of the company based on the amount dec...

Q: Ndovu plc is considering investing in a new project and, in

Ndovu plc is considering investing in a new project and, in the past, it would have used a cost of capital of 10 per cent as the discount rate to assess new projects. This rate had been calculated by...

Q: While eating his Kellogg’s Frosted Flakes one February morning, Tony noticed

While eating his Kellogg’s Frosted Flakes one February morning, Tony noticed the following notification on his iPhone: A quick click revealed reported earnings per share of $0.59 and...

Q: Walmart makes significant investments in operating capacity, primarily via investments in

Walmart makes significant investments in operating capacity, primarily via investments in property, plant, and equipment, but also via investments in wholly and partially owned subsidiaries. Walmart a...

Q: The Longmire Company recently reported net profits after taxes of $35

The Longmire Company recently reported net profits after taxes of $35.8 million. It has 3.5 million shares of common stock outstanding and pays preferred dividends of $2 million per year. a. Compute t...

Q: Find the EPS, P/E ratio, and dividend yield

Find the EPS, P/E ratio, and dividend yield of a company that has five million shares of common stock outstanding (the shares trade in the market at $25), earns 10% after taxes on annual sales of $150...

Q: The Anderson Company has net profits of $20 million, sales

The Anderson Company has net profits of $20 million, sales of $250 million, and 4.5 million shares of common stock outstanding. The company has total assets of $175 million and total stockholders’ equ...

Q: An investor estimates that next year’s sales for Dursley’s Hotels, Inc

An investor estimates that next year’s sales for Dursley’s Hotels, Inc. should amount to about $100 million. The company has five million shares outstanding, generates a net profit margin of about 10%...

Q: Nextbig Corp. currently has sales of $870 million; sales

Nextbig Corp. currently has sales of $870 million; sales are expected to grow by 26% next year (year 1). For the year after next (year 2), the growth rate in sales is expected to equal 13%. Over each...

Q: Captured Photographs doesn’t currently pay any dividends but is expected to start

Captured Photographs doesn’t currently pay any dividends but is expected to start doing so in four years. That is, Captured Photographs will go three more years without paying dividends and then is ex...

Q: Assume you obtain the following information about Wild Amusement Park:

Assume you obtain the following information about Wild Amusement Park: Total assets $75,000,000 Total equity $35,000,000 Net income $4,780,000 EPS $4.65 Dividend payout ratio 37% Required return 14% U...

Q: Jensen Inc. has total equity of $73 billion and 675

Jensen Inc. has total equity of $73 billion and 675 million shares outstanding. Its ROE is 12.7%. The dividend payout ratio is 21%. Calculate the company’s dividends per share (round to the nearest pe...

Q: Assume an investor uses the constant-growth DVM to value a

Assume an investor uses the constant-growth DVM to value a stock. Listed are various situations that could affect the computed value of a stock. Look at each one of these individually and indicate whe...

Q: Financial information for American Eagle and financial information for Buckle is presented

Financial information for American Eagle and financial information for Buckle is presented. Required: 1. Determine which company maintains a higher ratio of current assets to total assets. How might t...

Q: The following information was available for the year ended December 31,

The following information was available for the year ended December 31, 2022: Required: a. Calculate the price/earnings ratio for 2022. b. Calculate the dividend payout ratio for 2022. c. Calculate th...

Q: Presented here are summarized data from the balance sheets and income statements

Presented here are summarized data from the balance sheets and income statements of Wiper Inc.: Required: a. Calculate return on investment, based on net income and average total assets, for 2023 and...

Q: Alberton Inc., an all-equity-financed equipment manufacturer,

Alberton Inc., an all-equity-financed equipment manufacturer, has announced that it will change its capital structure to one that will have 30 percent of debt, using the proceeds from the debt issue t...

Q: Ambersome Inc. has decided against borrowing and to have all its

Ambersome Inc. has decided against borrowing and to have all its assets financed by equity. Furthermore, it intends to keep its payout ratio at 40 percent. Its assets turnover ratio is 0.9, its profit...