Paraflux Inc., a pharmacautical company reported earnings per share of 0,9 euros, return on

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Paraflux Inc., a pharmacautical
company reported earnings per
share of 0,9 euros, return on
assets of 13%, a debt-to-equity
ratio of 40%, a pre-tax interest
rate of 8% and a retention ratio of
85% for the previous year.
Moreover, the company had
registered growth in earnings per
share of 50% in the past five
years. Assuming that the tax rate
is 25% and that these figures will
be sustained in the future, the
expected growth rate in free cash
flow to equity (FCFE) will be:
a. 13,43%
b, 16,53%
c, 10,36%
d. None of the given answers is
correct
e. 11,22%
Transcribed Image Text:Paraflux Inc., a pharmacautical company reported earnings per share of 0,9 euros, return on assets of 13%, a debt-to-equity ratio of 40%, a pre-tax interest rate of 8% and a retention ratio of 85% for the previous year. Moreover, the company had registered growth in earnings per share of 50% in the past five years. Assuming that the tax rate is 25% and that these figures will be sustained in the future, the expected growth rate in free cash flow to equity (FCFE) will be: a. 13,43% b, 16,53% c, 10,36% d. None of the given answers is correct e. 11,22%
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