Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gugus flower shop Supplies has sales of R180,000, net profit after tax of R16 400, total assets of R280,000, total equity of R200,000, and paid

Gugu’s flower shop Supplies has sales of R180,000, net profit after tax of R16 400, total assets of R280,000, total equity of R200,000, and paid R6 760 in dividends. The firm maintains a constant dividend payout ratio. The firm is currently operating at full capacity. All costs and assets vary directly with sales. The firm does not want to obtain any additional external equity.

Calculate the following:

  1. Sustainable growth rate
  2. Dividend payout ratio
  3. Retention ratio 
  4. Projected total assets
  5. Current debt 
  6. Projected equity 
  7. At the sustainable rate of growth, how much new total debt must the firm acquire?

Step by Step Solution

3.38 Rating (154 Votes )

There are 3 Steps involved in it

Step: 1

Step 1 Answer a Dividend payout ratio Dividend paid Net profit after tax 100 Dividend payout ratio 6760 16400 100 Dividend payout ratio 4122 Return on ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Reporting Financial Statement Analysis And Valuation A Strategic Perspective

Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

9th Edition

1337614689, 1337614688, 9781337668262, 978-1337614689

More Books

Students also viewed these Accounting questions