Your firm has a ROE of 30%, a payout ratio of 70%, $130 million of total...

Your firm has a ROE of 30%, a payout ratio of 70%, $130 million of total stockholders’ equity, and $150 million of total liabilities. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue?

What are the advantages and disadvantages of the percent sales method?

Expert Solution

jeff jeffy answered 2 years ago

Your firm has an ROE of 11.8 % a payout ratio of 29 % $ 559,600...

Your firm has an ROE of 11.8 % a payout ratio of 29 % $ 559,600 of stockholders' equity, and $ 415,000 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue?

(a) Suppose that ratio analysis shows that a firm has an ROE equal to 18%, total...

(a) Suppose that ratio analysis shows that a firm has an ROE equal to 18%, total asset turnover equal to 3 times and Net profit margin equal to 4 percent. What is the firm’s debt to total assets (DEBT) Ratio? b). Suppose that a firm has determined that its ROA is 10 percent and its total assets turnover Ratio is 4. What is the firm’s net profit margin? (c). How is comparative ratio analysis carried out? (d). Name three types...

4. The blue company has ROE = 25%; growth in EPS = 4.5%; payout ratio of...

4. The blue company has ROE = 25%; growth in EPS = 4.5%; payout ratio of 35% and investors required return of 12.5%. Calculate the price to book value ratio. If P/BV = 2.5 you will buy_________ you will sell__________ 5.a) If the payout ratio is 35% and net profit margin is 4.5% with a growth rate of 5%, calculate price to sales ratio if you require a 11% return on investment. b) If sales rise by $1.25 per...

your firm has a constant profit margin of 5 percent and adividend payout ratio of...

your firm has a constant profit margin of 5 percent and a dividend payout ratio of 35 percent. currently, sales, net income, and retained earnings are 27400, 2350, 4400, respectively. if sales are expected to rise by 5 percent next year, what will be the pro forma retained earnings?A) 5264 B) 5721 C )6004 D) 1604 E) 864

A firm has an ROA of 10%, a dividend payout ratio of 40%, an Equity Multiplier...

A firm has an ROA of 10%, a dividend payout ratio of 40%, an Equity Multiplier of 1.60, what is the Sustainable Growth Rate? 9.04% 6.84% 9.60% 10.62% If full capacity sales levels of existing equipment are $2,000,000 and the firm is currently selling 70% of capacity, what percent can sales grow before new Fixed Assets are required? 42.86% 25.00% 70.00% 30.00% Current Assets = $900; Fixed Assets = $2,500; Accounts Payable = $300; Most recent year Sales of $1,500,...

A firm has an ROE of 20%, plowback ratio of 35%. The company just paid the...

A firm has an ROE of 20%, plowback ratio of 35%. The company just paid the annual dividend of $3 per share. What is the stock price if the required rate of return is 10%? 100 123 107 or 95.3

A firm has Net Income of $60,800 and has Total Assets of $601,991. The firm’s payout...

A firm has Net Income of $60,800 and has Total Assets of $601,991. The firm’s payout ratio is 60 percent. What is the firm’s Internal Growth rate? Can the firm grow at 4 percent without raising external funds and why? (Hint: Need to first compute ROA). Group of answer choices 6.45 percent; No, because 4 percent < Internal Growth Rate 6.45 percent; Yes, because 4 percent < Internal Growth Rate 4.21 percent; Yes, because 4 percent < Internal Growth Rate...

Queen, Inc., has a total debt ratio of .30.

Queen, Inc., has a total debt ratio of .30.a. What is its debt-equity ratio?b. What is its equity multiplier?

*Socal Engineering has a 5% profit margin and a 0.6 dividend payout ratio. The total asset...

*Socal Engineering has a 5% profit margin and a 0.6 dividend payout ratio. The total asset turnover is 1.40 and the equity multiplier is 2.0. What is the sustainable rate of growth? How the SGR will be changed if the company changes its dividend policy and pays only 40% of the net income as dividend? The Adam Company has sales of $498,000, cost of goods sold of $263,000, and accounts receivable of $50,000. How long on average does it take...

ROE and Leverage Suppose the firm in Problem 1 has a market-to-book ratio of 1.0. a....

ROE and Leverage Suppose the firm in Problem 1 has a market-to-book ratio of 1.0. a. Calculate return on equity, ROE, under each of the three economic scenarios before any debt is issued. Also, calculate the percentage changes in ROE for economic expansion and recession, assuming no taxes. b. Repeat part (a) assuming the firm goes through with the proposed recapitalization. c. Repeat parts (a) and (b) of this problem assuming the firm has a tax rate of 35 percent...

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