Essay
A company has announced $50,000 in net income after paying taxes of $26,000 and interest of $20,000.They intend to pay $17,000 of net income as dividends.Their assets have averaged $600,000 over the past year, during which their total debt ratio has averaged 40 percent.Given this information, answer the following about the company's profitability:
Calculate the ROA and ROE.
Calculate the payout and plowback ratios.
What effect will the plowback have on the company's growth in equity?
Correct Answer:
Verified
a.
Net income + tax + interest = EBIT
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Correct Answer:
Verified
Net income + tax + interest = EBIT
$5...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
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