most recent financial statements for WFY, Co., are shown here: INCOME STATEMENT SALES 35250,00 COSTS 24675,00 TAXABLE INCOME 10575,00 TAXES(35%) 3701,25 NET INCOME 4582,20 BALANCE SHEET CURRENT ASSEST 10400 DEBT 17500 FIXED ASSEST 28750 EQUITY 21650 TOTAL 39159 TOTAL 39150 Assets and costs are proportional to sales. Debt and equit
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
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.
The most recent financial statements for WFY, Co., are shown here:
INCOME STATEMENT
| SALES | 35250,00 |
| COSTS | 24675,00 |
| TAXABLE INCOME | 10575,00 |
| TAXES(35%) | 3701,25 |
| NET INCOME | 4582,20 |
| CURRENT ASSEST | 10400 | DEBT | 17500 |
| FIXED ASSEST | 28750 | EQUITY | 21650 |
| TOTAL | 39159 | TOTAL | 39150 |
Assets and costs are proportional to sales. Debt and equity are not. The company pays a payout ratio of 60%, and the company wishes to maintain a constant payout ratio. The
a) What is the external financing needed?
b) Calculate the internal growth rate. How do you interpret it?
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