Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Planetary Travel Co. has $192,000,000 in stockholders' equity. Common stock is $60,000,000 and the balance is retained earnings. The firm has $260,000,000 in total
Planetary Travel Co. has $192,000,000 in stockholders' equity. Common stock is $60,000,000 and the balance is retained earnings. The firm has $260,000,000 in total assets and 4 percent of this value is in cash. Earnings for the year are $22,000,000 and are included in retained earnings. a. What is the legal limit on current dividends? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) Legal limit on current dividends b. What is the practical limit based on liquidity? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) Practical limit based on liquidity c. If the company pays out the amount in part b. what is the dividend payout ratio? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Payout ratio %
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Planetary Travel Co Dividend Analysis a Legal Limit on Current Dividends To calculate the legal ...Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started