Question
1. Stop and Go has a 4 percent profit margin and a 40 percent dividend payout ratio. The total asset turnover is 1.50 and the
1. Stop and Go has a 4 percent profit margin and a 40 percent dividend payout ratio. The total asset turnover is 1.50 and the debt-equity ratio is .55. What is the sustainable rate of growth?
A. 4.94 percent
B. 3.84 percent
C. 5.91 percent
D. 5.29 percent
E. 6.53 percent
2. The Two Sisters has a 10 percent return on assets and a 30 percent retention ratio. What is the internal growth rate?
A. 10.09 percent
B. 6.79 percent
C. 7.00 percent
D. 3.09 percent
E. 2.91 percent
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3. Major Manuscripts, Inc.
2012 Income Statement
Net sales $ 8,300
Cost of goods sold 7,115
Depreciation
260
Earnings before interest and taxes $ 925
Interest paid
56
Taxable Income $ 869
Taxes
343
Net income
$
526
Dividends $ 197
Major Manuscripts, Inc.
2012 Balance Sheet
2012 2012
Cash $ 2,900 Accounts payable $ 2,050
Accounts rec. 930 Long-term debt 350
Inventory
3,200
Common stock $ 3,600
Total $ 7,030 Retained earnings
4,930
Net fixed assets
3,900
Total assets
$
10,930
Total liabilities & equity
$
10,930
Major Manuscripts, Inc., is currently operating at maximum capacity. All costs, assets, and current liabilities vary directly with sales. The tax rate and the dividend payout ratio will remain constant. How much additional debt is required if no new equity is raised and sales are projected to increase by 10 percent?
A. $176
B. $876
C. $153
D. $362
E. $526
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4. Major Manuscripts, Inc.
2012 Income Statement
Net sales $ 7,700
Cost of goods sold 6,800
Depreciation
220
Earnings before interest and taxes $ 680
Interest paid
60
Taxable Income $ 620
Taxes
235
Net income
$
385
Dividends $ 196
Major Manuscripts, Inc.
2012 Balance Sheet
2012 2012
Cash $ 2,330 Accounts payable $ 1,780
Accounts rec. 870 Long-term debt 360
Inventory
2,350
Common stock $ 2,500
Total $ 5,550 Retained earnings
4,120
Net fixed assets
3,210
Total assets
$
8,760
Total liabilities & equity
$
8,760
Assume that Major Manuscripts, Inc., is currently operating at 80 percent of capacity and that sales are projected to increase to $10,100. What is the projected addition to fixed assets?
A. $432
B. $475
C. $633
D. $274
E. $158
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5. Hungry Kids
2012 Income Statement
Net sales $ 5,500
Cost of goods sold 4,100
Depreciation
725
Earnings before interest and taxes $ 675
Interest paid
140
Taxable Income $ 535
Taxes
218
Net income
$
317
Dividends $ 82
Addition to retained earnings $ 235
Hungry Kids
2012 Balance Sheet
2012 2012
Cash $ 45 Accounts payable $ 1,375
Accounts rec. 550 Long-term debt 1,650
Inventory
880
Common stock $ 2,100
Total $ 1,475 Retained earnings
3,850
Net fixed assets
7,500
Total assets
$
8,975
Total liabilities & equity
$
8,975
Hungry Kids is currently operating at full capacity. The profit margin and the dividend payout ratio are held constant. Net working capital and fixed assets vary directly with sales. Sales are projected to increase by 4 percent. What is the external financing need?
A. $44
B. $59
C. $43
D. $42
E. $60
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Labour Finance And Inequality
Authors: Suzanne J. Konzelmann, Simon Deakin, Marc Fovargue-Davies, Frank Wilkinson
1st Edition
1138919721, 978-1138919723
