Please explain: Assume that Company’s ABC net income for a period is $200 mln, total assets...
Please explain:
Assume that Company’s ABC net income for a period is $200 mln, total assets is $900 mln and total equity is $450mln. $120mln were retained from the period’s net income. The Sustainable Growth Rate is closest to:
Homework Answers
ROE = Net Income / Sales * Sales /Total Assets * Total Assets / Shareholder's equity
= Net income / Shareholder's equity
= $ 200/450
= 0.444444
Retention Ratio = Amount retained / Net Income
= 120/200
= 0.60
Sustainable growth rate = ( ROE * Retention Ratio)/ [ 1- ( ROE*Retention Ratio)]
=(0.44444*0.60)/[1-(0.44444*0.60)]
= 36.36%
Answer = 36.36%
Add Answer to:
Please explain:
Assume that Company’s ABC net income for a period is $200 mln,
total assets...
2018 2019 Assets Current assets Cash Accounts receivable Inventory 2018 2019 Liabilities and Owners' Equity Current...
2018 2019 Assets Current assets Cash Accounts receivable Inventory 2018 2019 Liabilities and Owners' Equity Current liabilities Accounts payable $500 $ 700 Notes payable 900 700 $ 500 $1,000 500 400 900 600 Total $ 1.900 $2,000 Total $ 1,400 $ 1,400 $ 400 $ 600 Long-term debt Owners' equity Common stock Accumulated retained earnings $ 600 $ 621 Fixed assets $ 500 $ 579 Net plant and equipment $1,000 $ 1,200 Total $ 1,100 $ 1200 Total assets $2,900...
Sourstone, Inc., had total assets of $304,000 and equity of $195,000 at the beginning of the...
Sourstone, Inc., had total assets of $304,000 and equity of $195,000 at the beginning of the year. At the end of the year, the company had total assets of $329,000. During the year, the company sold no new equity. Net income for the year was $109,000 and dividends were $52,500. What is the sustainable growth rate if you calculate ROE based on the end-of-period equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2...
If a company’s total assets increased while liabilities and common stock were unchanged, then: (The answer...
If a company’s total assets increased while liabilities and common stock were unchanged, then: (The answer is D, can you just explain to me why the answer is that. Thank you!) The company must have purchased assets with cash No dividends were paid during the period Retained earnings were less than net income during the period Revenues were greater than expenses
3. Use these financial statements to answer questions Cash Accounts receivable Inventory Net fixed assets Total...
3. Use these financial statements to answer questions Cash Accounts receivable Inventory Net fixed assets Total assets Balance Sheet 2007 2008 $ 2,100 $ 2,300 Accounts payable 4,900 5,600 Long-term debt 9.800 11,400 Common stock 27,100 26.800 Retained earnings $43.900 $46,100 Total liabilities and equity 2007 2008 $ 3,600 $ 4,200 24,600 15,400 11,500 13,000 4,200 13,500 $43.900 $46,100 Income Statement Net Sales $61,800 Costs 39,200 Depreciation 5,200 EBIT 17,400 Interest 1,100 Taxable income 16,300 Taxes 5,500 Net Income $10,800...
Gilmore, Inc., had equity of $190,000 at the beginning of the year. At the end of the year, the company had total assets...
Gilmore, Inc., had equity of $190,000 at the beginning of the year. At the end of the year, the company had total assets of $345,000. During the year, the company sold no new equity. Net income for the year was $40,000 and dividends were $5,600. a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the sustainable growth...
27. A private equity group who wants to purchase all of the company’s assets would be...
27. A private equity group who wants to purchase all of the
company’s assets would be willing to pay approximately __________.
Do not use the DDM. Use either FCFF or FCFE, whichever is
appropriate.
$9,583M
$10,222M
$10,518M
$17,969M
$19,167M
Assume all future cash flows (FCFF, FCFE, and Dividends) will grow at a constant sustainable growth rate (g) in perpetuity; note this growth rate is dependent on a company's return on equity and dividend payout policy. The company's cost of debt...
The Southern Company began the accounting period with assets of $600, common stock of $200, and...
The Southern Company began the accounting period with assets of $600, common stock of $200, and were $50. Common stock was unchanged during the accounting period. Liabilities decreased by $100. T00,000. 13. retained earnings of $250. During the period, revenue was $300, expenses were $200, and dividends Based on this information, net income amounted to $50. total assets at the end of the period were $550. retained earnings at the end of the period amounted to $350. liabilities at the...
At the end of the year, ABC Company's net assets were $60,000. Net income calculated by...
At the end of the year, ABC Company's net assets were $60,000. Net income calculated by using the capital maintenance concept was $20,000. During the year, additional common stock was issued for $14,000, and $8,000 of dividends were paid. The net assets at the beginning of the year were a.$31,000. b.$20,000. c.$34,000. d.$25,000. Which of the following statements regarding the capital maintenance concept is not true? a.The capital maintenance concept implies net income for the period is the amount of...
The income statement and balance sheet for GUS, Inc. are provided below. (Note that the reported...
The income statement and balance sheet for GUS, Inc. are provided below. (Note that the reported figures in the statements are expressed in thousands of dollars.) GUS, INC. Balance Sheets as of December 31, 2018 and 2019 (in 000s) 2018 2019 2018 2019 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 100 $ 175 Accounts payable $ 300 $ 380 Accounts receivable 300 275 Notes payable 500 560 Inventory 450 500 Total $ 850 $ 950 Total...
Eagle Sports Supply has the following financial statements. Assume that Eagle’s assets are proportional to its...
Eagle Sports Supply has the following financial statements.
Assume that Eagle’s assets are proportional to its sales.
INCOME STATEMENT, 2019
Sales
$
1,250
Costs
240
Interest
50
Taxes
190
Net income
$
770
BALANCE SHEET, YEAR-END
2018
2019
2018
2019
Assets
$
4,200
$
4,500
Debt
$
1,400
$
1,500
Equity
2,800
3,000
Total
$
4,200
$
4,500
Total
$
4,200
$
4,500
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed...
2018 2019 Assets Current assets Cash Accounts receivable Inventory 2018 2019 Liabilities and Owners' Equity Current liabilities Accounts payable $500 $ 700 Notes payable 900 700 $ 500 $1,000 500 400 900 600 Total $ 1.900 $2,000 Total $ 1,400 $ 1,400 $ 400 $ 600 Long-term debt Owners' equity Common stock Accumulated retained earnings $ 600 $ 621 Fixed assets $ 500 $ 579 Net plant and equipment $1,000 $ 1,200 Total $ 1,100 $ 1200 Total assets $2,900...
3. Use these financial statements to answer questions Cash Accounts receivable Inventory Net fixed assets Total assets Balance Sheet 2007 2008 $ 2,100 $ 2,300 Accounts payable 4,900 5,600 Long-term debt 9.800 11,400 Common stock 27,100 26.800 Retained earnings $43.900 $46,100 Total liabilities and equity 2007 2008 $ 3,600 $ 4,200 24,600 15,400 11,500 13,000 4,200 13,500 $43.900 $46,100 Income Statement Net Sales $61,800 Costs 39,200 Depreciation 5,200 EBIT 17,400 Interest 1,100 Taxable income 16,300 Taxes 5,500 Net Income $10,800...
27. A private equity group who wants to purchase all of the
company’s assets would be willing to pay approximately __________.
Do not use the DDM. Use either FCFF or FCFE, whichever is
appropriate.
$9,583M
$10,222M
$10,518M
$17,969M
$19,167M
Assume all future cash flows (FCFF, FCFE, and Dividends) will grow at a constant sustainable growth rate (g) in perpetuity; note this growth rate is dependent on a company's return on equity and dividend payout policy. The company's cost of debt...
The Southern Company began the accounting period with assets of $600, common stock of $200, and were $50. Common stock was unchanged during the accounting period. Liabilities decreased by $100. T00,000. 13. retained earnings of $250. During the period, revenue was $300, expenses were $200, and dividends Based on this information, net income amounted to $50. total assets at the end of the period were $550. retained earnings at the end of the period amounted to $350. liabilities at the...
The income statement and balance sheet for GUS, Inc. are provided below. (Note that the reported figures in the statements are expressed in thousands of dollars.) GUS, INC. Balance Sheets as of December 31, 2018 and 2019 (in 000s) 2018 2019 2018 2019 Assets Liabilities and Owners' Equity Current assets Current liabilities Cash $ 100 $ 175 Accounts payable $ 300 $ 380 Accounts receivable 300 275 Notes payable 500 560 Inventory 450 500 Total $ 850 $ 950 Total...
Eagle Sports Supply has the following financial statements.
Assume that Eagle’s assets are proportional to its sales.
INCOME STATEMENT, 2019
Sales
$
1,250
Costs
240
Interest
50
Taxes
190
Net income
$
770
BALANCE SHEET, YEAR-END
2018
2019
2018
2019
Assets
$
4,200
$
4,500
Debt
$
1,400
$
1,500
Equity
2,800
3,000
Total
$
4,200
$
4,500
Total
$
4,200
$
4,500
a. What is the internal growth rate of Eagle Sports if the dividend payout ratio is fixed...
Most questions answered within 3 hours.
-
Trace the following recursive methods:
a) isPal with the string “abccda”
b) isAnBn with the string...
asked 1 minute ago -
1. Which of the following is false about photosynthesis?
A. ATP is the molecule used to...
asked 48 minutes ago -
A simple random sample of size n=64 is obtained from a
population with a mean of...
asked 1 hour ago -
(2 dimensions, 1 object, 2 accelerations)
1) A projectile is thrown with a wind. The wind...
asked 2 hours ago -
Brian makes $34,100 per year. How much can Brian expect to
contribute to FICA taxes in...
asked 3 hours ago -
To buy a new house you must borrow $155,000. To do this you take
out a...
asked 3 hours ago -
Spacely Sprockets is evaluating the construction of a new plant
on land the company purchased for...
asked 4 hours ago -
1. Consider a linear regression model of y on K regressors and
an intercept.
(i) Describe...
asked 4 hours ago -
Enter a balanced equation for the reaction between hydrochloric
acid and sodium sulfite.
Express your answer...
asked 4 hours ago -
Give a regular expression describing the language
{x | x ∈ Σ* and x does not...
asked 4 hours ago -
Masses of 1.0 kg, 2.0 kg, and 3.0 kg are each separately subject
to a net...
asked 4 hours ago -
The mode of philosophical argumentation and thought. How do
philosophers think and write? What is important...
asked 4 hours ago