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Changes in Financial Ratios: A goods manufacturing company is assessing the impact of the current economic...

Changes in Financial Ratios: A goods manufacturing company is assessing the impact of the current economic conditions. Management is hoping to improve inventory turnover by 15%. They also expect the cost of goods sold to increase by 10% due to new safety protocols.

Part A. What % change in average inventory should they expect?

Part B. Additionally, management wishes to increase their dividend payout ratio by 6%. Analysts expect the earnings per share to increase by 2.5%. By what percent will dividends per share change?

Part C. Would it be a good decision for management to increase the dividend payout ratio given the change average inventory? Why or why not?

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The answer is as given.


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