ZuoTi.Pro
Question

Planners have determined that sales will increase by 20% next year, and the profit margin will...

Planners have determined that sales will increase by 20% next year, and the profit margin will remain at 10% of sales. Which one of the following statements is correct if the payout ratio remains at 30%

A. Net Income will increase by 10% next year

B. The addition to retained earnings will increase by 20% next year

C. The dividend will increase by 6% next year

D. The addition to retained earnings will equal 6% of the sales increase next year

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

Increase in Sales = 20%

Hence, increase in net income = 20%

Payout ratio = 30%

Increase in Dividend = 20%*30% = 6%

Increase in Retained Earnings = 20%(1-0.3) = 14%

Hence, the correct statement is

C. The dividend will increase by 6% next year

0 0
Add a comment
Know the answer?
Add Answer to:
Planners have determined that sales will increase by 20% next year, and the profit margin will...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Question 3 The company expects sales of S672 500 next year. The profit margin is 4.6...

    Question 3 The company expects sales of S672 500 next year. The profit margin is 4.6 percent and the firm has a 15 percent dividend payout ratio. (Note: profit margin - Net Income/Sales) What is the projected increase in retained earnings ? 1 points Save Answer O a. $26.29s O b. $17.501 O c. $4,640 O d. $20,640 O e. $30,935

  • Sales are expected to increase by 3 percent next year

    TABLE 1          Sales         $47,000Current assets of $ 5,100,Current liabilities      $ 6,200,          Cost           44,650Net fixed assets of $51,500Owners Equity           50, 400          Net Income 2,35056,600Owners Equ & Liab.      56,600Sales are expected to increase by 3 percent next year. Net Income, that is, Net Profit Margin (NPM) is 5% of Sales. The firm has no long term debt and does not plan on acquiring any. The firm does not pay any dividends and all assets, short term liabilities, and costs vary directly with...

  • Percentage of Sales Models. Here are abbreviated financial statements for Planners Peanuts: Income statement 2019 Sales...

    Percentage of Sales Models. Here are abbreviated financial statements for Planners Peanuts: Income statement 2019 Sales $2000 cost $1500 Net Income $500 Balance Sheet, year-end 2018 2019 2018 2019 Assets $2500 $3000 Debt $833 $1000 Equity $1667 $2000 Total $2500 Total $2500 $3000 If sales increase by 20% in 2020 and the company uses a strict percentage of sales planning model (meaning that all items on the income and balance sheet also increase by 20%, what must be the balancing...

  • QUESTION 5 Next year, JuliJuli Sdn Bhd is planning for a major sales increase of 40%....

    QUESTION 5 Next year, JuliJuli Sdn Bhd is planning for a major sales increase of 40%. Sales are currently RM30,000,000 and it is forecast that next year's sales will be RM42,000,000. Current assets are expected to increase in direct proportion with increase in sales. Similarly, account payable and accrued expenses are also expected proportionately es per the increase in sales. Fixed assets on the other hand will increase by RM1,000,000; and long term debt expected to remain constant. The net...

  • The most recent financial statements for ABC Inc., follow. Sales for next year are projected to...

    The most recent financial statements for ABC Inc., follow. Sales for next year are projected to grow by 20 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. ABC, INC. Income Statement Sales $ 582,391 Costs 508,983 Other expenses 19,721 Earnings before interest and taxes $ ? Interest paid 12,109 Taxable income $ ? Taxes (30%) ?...

  • Given the following financial statements, what is the forecasted retained earnings if all revenues, expenses, assets...

    Given the following financial statements, what is the forecasted retained earnings if all revenues, expenses, assets and liabilities remain a constant percent of sales, and sales increase by 20%? Assume the common stock account will remain fixed and the dividend payout ratio remains constant.               $3,776 $3,236 $1,896 We were unable to transcribe this imageGiven the following financial statements, what is the forecasted retained earnings if all revenues, expenses assets and liabilities remain a constant percent of sales, and sales...

  • Tobin Supplies Company expects sales next year to be $520,000. Inventory and accounts receivable will increase...

    Tobin Supplies Company expects sales next year to be $520,000. Inventory and accounts receivable will increase $90,000 to accommodate this sales level. The company has a steady profit margin of 20 percent with a 30 percent dividend payout. How much external financing will Tobin Supplies Company have to seek? Assume there is no increase in liabilities other than that which will occur with the external financing. Please show steps. No handwritten/photo explanations. Thank you.

  • The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to...

    The most recent financial statements for Fleury Inc., follow. Sales for next year are projected to grow by 22 percent. Interest expense will remain constant; the tax rate and the dividend payout rate will also remain constant. Costs, other expenses, current assets, fixed assets and accounts payable increase spontaneously with sales. FLEURY, INC. Income Statement Sales $ 572,274 Costs 504,110 Other expenses 16,373 Earnings before interest and taxes $ ? Interest paid 13,013 Taxable income $ ? Taxes (30%) ?...

  • 13. (Percentage of sales retained earnings) A company reported $250,000 of retained earnings on its balance...

    13. (Percentage of sales retained earnings) A company reported $250,000 of retained earnings on its balance sheet last year. In the coming year it expects sales of $800,000. Forecast the end-of-coming-year balance of retained earnings if the company has a: a. Net margin ratio of 12% and a dividend payout ratio of 40% b. Net margin ratio of 8% and a dividend payout ratio of 15% c. Net margin ratio of 5% and a dividend payout ratio of 75%

  • QUESTION S Next year, JulJuli Sdn Bhd is planning for a major aics increase af 40%....

    QUESTION S Next year, JulJuli Sdn Bhd is planning for a major aics increase af 40%. Sales are currently RM30,000,000 and it is Sorecast that next year's salcs will be RM42,000,000. Current assets are expected to increase in direct proportiun with increaso in sales. Similarly, account payable and accrued expenses are also the other hand will increase by RM1,000,000 and long term debt expected to remain constant The net profit margin on sales is 3% expected proportionately as per the...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT