Suppose you are an analyst in pharmaceutical industry for Bank of America You collect the following data to estimate the expected growth rate of dividends and use it as an input for valuing an oil companys common stock Return on Assets 10 Profit Margin 8 Debt Equity 4 5 Payout Ratio 50 a The leverage ratio of this company is (sample answer 3 50) b The companys expected growth rate is (sample answer 25 60 )

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Suppose you are an analyst in pharmaceutical industry for Bank of America. You collect the following data to estimate the expected growth rate of dividends

Suppose you are an analyst in pharmaceutical industry for Bank of America. You collect the following data to estimate the expected growth rate of dividends and use it as an input for valuing an oil companys common stock.

Return on Assets	10%
Profit Margin	8%
Debt/Equity	4.5
Payout Ratio	50%

a. The leverage ratio of this company is (sample answer: 3.50) b. The companys expected growth rate is (sample answer: 25.60%)

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