Ramble On Co. wishes to maintain a growth rate of 10.4 percent per year, a debt-equity ratio of 1.0, and a dividend payout ratio of 15 percent. The ratio of total assets to sales is constant at .82. What profit margin must the firm achieve? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Profit margin % 8.26
Ramble On Co. wishes to maintain a growth rate of 10.4 percent per year, a debt-equity ratio of 1.0, and a dividend payout ratio of 15 percent. The ratio of total assets to sales is constant at .82. What profit margin must the firm achieve? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Profit margin % 8.26
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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![**Ramble On Co. Financial Analysis Exercise**
Ramble On Co. wishes to maintain a growth rate of 10.4 percent per year, a debt-equity ratio of 1.0, and a dividend payout ratio of 15 percent. The ratio of total assets to sales is constant at .82.
**Question:**
What profit margin must the firm achieve?
- **Note:** Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).
**Answer:**
Profit margin = 8.26%
The calculation for the profit margin required to achieve the specified growth rate, taking into account the given financial ratios, yields a result of 8.26%.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F249e3087-ac84-499e-a043-461bff034fe9%2F5b00ff2e-d23d-46b0-9f3d-09331930390d%2Fd4i51g5.png&w=3840&q=75)
Transcribed Image Text:**Ramble On Co. Financial Analysis Exercise**
Ramble On Co. wishes to maintain a growth rate of 10.4 percent per year, a debt-equity ratio of 1.0, and a dividend payout ratio of 15 percent. The ratio of total assets to sales is constant at .82.
**Question:**
What profit margin must the firm achieve?
- **Note:** Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).
**Answer:**
Profit margin = 8.26%
The calculation for the profit margin required to achieve the specified growth rate, taking into account the given financial ratios, yields a result of 8.26%.
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