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Bulldogs Inc. recently reported net income of P5,000,0000.  The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%.  If the sales increase, the profit margin will remain at its current level.  The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? A. 4,500,000 B. 36,000,000 C. 750,000 D. 3,750,000

Bulldogs Inc. recently reported net income of P5,000,0000.  The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%.  If the sales increase, the profit margin will remain at its current level.  The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset? A. 4,500,000 B. 36,000,000 C. 750,000 D. 3,750,000

Essentials Of Investments
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
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Bulldogs Inc. recently reported net income of P5,000,0000.  The firm has P40,000,000 total assets. Next year, National Inc. is forecasting a 20% increase in sales. The firm also estimates that if sales increase by 20%, spontaneous liabilities will increase by P950,000. The retention ratio is maintained at 75%.  If the sales increase, the profit margin will remain at its current level.  The company is operating at full capacity. How much is the increase in retained earnings that will contribute to cover the increase in asset?

A. 4,500,000
B. 36,000,000
C. 750,000
D. 3,750,000
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