Question
Planetary Travel Co. has $210,000,000 in stockholders equity. Common stock is $40,000,000 and the balance is retained earnings. The firm has $295,000,000 in total assets
Planetary Travel Co. has $210,000,000 in stockholders equity. Common stock is $40,000,000 and the balance is retained earnings. The firm has $295,000,000 in total assets and 4 percent of this value is in cash. Earnings for the year are $21,000,000 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).)
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).)
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.)
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