Assume that a firm has Sales of $25,000,000, total assets of $20,000,000, current assets of $8,000,000, spontaneous liabilities of $3,000,000, a profit margin of 3.750 percent, a tax rate of 40%, and a dividend payout rate of 60 percent. Also assume that sales are expected to increase to $28,000,000 for the coming year and that the firm will not need to increase its fixed assets at this level of sales. Given this information, and using the equation approach, determine the additional funds needed for the coming year. O $180,000 O $168,800 $171,600 O $177,200 O $174.400
Assume that a firm has Sales of $25,000,000, total assets of $20,000,000, current assets of $8,000,000, spontaneous liabilities of $3,000,000, a profit margin of 3.750 percent, a tax rate of 40%, and a dividend payout rate of 60 percent. Also assume that sales are expected to increase to $28,000,000 for the coming year and that the firm will not need to increase its fixed assets at this level of sales. Given this information, and using the equation approach, determine the additional funds needed for the coming year. O $180,000 O $168,800 $171,600 O $177,200 O $174.400
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
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Question 3
Assume that a firm has Sales of $25,000,000, total assets of $20,000,000, current assets of
$8,000,000, spontaneous liabilities of $3,000,000, a profit margin of 3.750 percent, a tax rate of
40%, and a dividend payout rate of 60 percent. Also assume that sales are expected to increase to
$28,000,000 for the coming year and that the firm will not need to increase its fixed assets at this
level of sales. Given this information, and using the equation approach, determine the additional
funds needed for the coming year.
O $180,000
$168,800
$171,600
$177,200
O $174,400
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