High Flyer, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity

Question:

High Flyer, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .25. The profit margin is 5 percent, and total asset turnover is constant at 1.20. Is this growth rate possible? To answer, determine what the dividend payout ratio must be. How do you interpret the result?

Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...

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