4)Johnson and Johnson had a return on equity in 2020 of 31.4%and paid out 36% of it earning as depends it earned a net income of $1.625million on a book value of equity of $5,171million .as consequence of the covid pandemic .the return on equity is expected to drop 25%in 2021and that the dividend pay out ratio will remain unchanged A) Estimate the growth rate in earnings based upon 2020 numbers B)Estimate the growth rate in 2020when the ROE drops from 31.4% to 25%
Dividend Policy
A dividend is a part of the profit paid to the shareholder in an organization. The management of the organization has the right to decide the policy for giving a dividend from the earnings to the shareholder. However, an organization is not in the obligation to declare a dividend for the investor. Dividend policy differs from organization to organization. As the management has the only authority to decide dividend rate, dividend amount, and time of dividend payout by considering all other elements that create an impact on the payment of a dividend.
Stocks And Dividends
Stock or equities are generally sold and bought in the Stock Exchange or which is popularly known as the stock market. Stocks are issued in the Stock Exchange for the sole purpose of raising funds for the Corporation or the company itself. Now since an individual has purchased a portion of the Corporation or company, he or she may claim to be a part of the earnings or profit of the company.
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
