Gamgee Company wishes to maintain a growth rate of 11.6 percent per year, a debt-equity ratio of 1.6, and a dividend payout ratio of 25 percent. The ratio of total assets tosales is constant at .88. What profit margin must the firm achieve? (Do not roundintermediate calculations and enter your answer as a percent rounded to 2 decimalplaces, e.g., 32.16.)Profit margin26.17 %

Samgee Company wishes to maintain a growth rate of 11. equity ratio of 1.6, and a dividend payout ratio of 25 percent ales is constant at .88. What profit margin must the fir ntermediate calculations and enter your answer as a per places, e.g., 32.16.) Profit margin 26.17 %

Samgee Company wishes to maintain a growth rate of 11. equity ratio of 1.6, and a dividend payout ratio of 25 percent ales is constant at .88. What profit margin must the fir ntermediate calculations and enter your answer as a per places, e.g., 32.16.) Profit margin 26.17 %

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: The Oriole Timber Company has the following ratios: Net sales/Total assets-2.76; ROA-9.74 % ;…

A: Net sales/Total assets = 2.79ROA = 9.74%ROE = 15.7%The profit margin is

Q: You've collected the following information about Caccamisse, Incorporated: Sales Net income…

A: The sustainable growth rate (SGR) could be a key budgetary metric that measures the most extreme…

Q: > Assume the following Balance Sheet Accounts: Cash Accounts Receivable Inventory Fixed Assets Total…

A: Additional financing needed refers to the amount of money a business must raise in order to cover…

Q: Gardial & Son has an ROA of 12%, a 2% profit margin, and a return on equity equal to 18%. What is…

A: According to DuPont analysis, Return on assets = Net profit margin*Total asset turnover Return on…

Q: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends = Sustainable growth…

A: Proft margin9.50%Capital Intensity ratio0.56Debt-Equity Ratio0.71Net…

Q: Consider a retail firm with a net profit margin of 3.93 %, a total asset turnover of 1.87, total…

A: The objective of the question is to calculate the Return on Equity (ROE) for a retail firm under…

Q: Pont Analysis Gardial & Son has an ROA of 12%, a 4% profit margin, and a return on equity equal…

A: DuPont is used to determine the return on equity and in this return on equity is broken down into…

Q: Henderson's Hardware has an ROA of 11%, a 7% profit margin, and an ROE of 18%. A). What is its…

A: Total assets turnover Return on assets = Net profit / Assets turnover So, Assets turnover = Return…

Q: alculate the sustainable growth rate

A: Answer:- Sustainable growth rate = 14.05 % Explanation:- Total asset turnover = 1 / Capital…

Q: Consider a retail firm with a net profit margin of 3.61 % a total asset turnover of 1.75, total…

A: Step 1: The calculation of the return on equity AB1Net profit margin3.61%2Total asset…

Q: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends II II = 8.6% 0.47 0.62…

A: Sustainable growth rate refers to that maximum possible growth rate at which a company can grow…

Q: increase by 6 percent. What is the pro forma retained earnings if the current retained earnings b…

A: Given information :

Q: Need Solution

A: To calculate the firm's Return on Assets (ROA), we need to use the following formula:Given:Profit…

Q: The company’s ratios are: Current ratio = 1.58% Quick ratio = 1.53% operating margin = 3.49%…

A: Bank loan is a type of debt that can be taken by the firm to raise additional capital. In other…

Q: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends 9.6% .57 .72…

A: The Sustainable Growth Rate (SGR), also known as the Internal Growth Rate, is a financial metric…

Q: The company’s ratios are: Current ratio = 1.58% Quick ratio = 1.53% operating margin = 3.49%…

A: The current ratio of a company shows whether it can pay-off the short-term debt from its current…

Q: As a consultant to Bass Inc, you have been provided with the following data D1= $0.67, P0= $27.50…

A: Dividend first year (D1)=0.67 Current stock price (P0)=27.50 Constant growth rate (g) =8%

Q: Assume that DroneTech's 3 year pro-forma is below. Assume that the appropriate discount rate is 20%.…

A: The present value of earnings is the value which has been determined when the earnings of the years…

Q: Assume that the net profit margin = 9%, assets are 95 cents for every dollar of sales, and equity is…

A: ROE (DuPont Model) = Net Profit Margin x Asset Turnover x Equity Multiplier Where, Net Profit…

Q: You are given the following information on Kayla's Heavy Equipment: Profit margin 5.4% Capital…

A: Solution:Sustainable growth rate means the constant rate at which the firm is growing.We know, g = b…

Q: Henderson's Hardware has an ROA of 14%, a 6% profit margin, and an ROE of 19%. What is its total…

A: The objective of the question is to calculate the total assets turnover and the equity multiplier…

Q: Glück Enterprises anticipates earnings per of share of $3.15 next year, earnings are expected to…

A: Forward PE basically is the Price of the stock divided by the expected EPS. Forward PE =…

Q: Ladders, Inc. has a net profit margin of 5.6% on sales of $49.1 million and $1.5 million of interest…

A: ROE and ROA are two profitability ratios which shows ratio of net income with Equity value of the…

Q: The Corner Store has sales of $68,900, dividends of $1,960, and net income of $4,900. The firm is…

A: Current dividend payout = Dividends / net income.= (1,960 / 4,900).= 40%.Hence new payout ratio =…

Q: You have the following data: D1 = $1.80; PO = $36.00; and g = 3.00% (constant).

A: Dividend discount model:The Dividend Discount Model (DDM) remains the dominant method in equity…

Q: What is the equations you use for the questions below to solve in excel?

A: The Gordon growth model: The Gordon Growth model recognizes that the dividends constitute income or…

Q: Total asset turnover Profit margin Equity multiplier Payout ratio 2.5 5.2% 1.3 22% "hat is the…

Q: For the most recent year, Robin Company reports operating income of $660,000. Robin's sales margin…

A: ROI = Sales margin x Capital turnover

Q: A firm has a return on equity of 18 percent. The total asset turnover is 1.6 and the profit margin…

A: Your take-home pay, sometimes referred to as net income, is the amount of money that remains in your…

Q: A company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can…

A: We need to use formula below to calculate PVGO of the company. The equation is whereD1= next…

Q: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends ☐☐☐ 8.6% .47 .62 $…

A: Sustainable growth rate is that quantum of maximum growth rate that can be sustained by a company…

Q: Henderson's Hardware has an ROA of 15%, a 4.5% profit margin, and an ROE of 25%. What is its total…

A: Given, ROA is 15% Profit margin is 4.5% ROE is 25%

Question

Gamgee Company wishes to maintain a growth rate of 11.6 percent per year, a debt-
equity ratio of 1.6, and a dividend payout ratio of 25 percent. The ratio of total assets to
sales is constant at .88. 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
26.17 %

Expert Solution

Step 1

Profit margins are one of the most fundamental and commonly used financial figures in corporate finance. A company's profit is measured on an income statement at three levels, beginning with the most basic—gross profit—and rising to the most comprehensive net profit. The difference between these two is the operating profit.

Formula of Profit Margin:

$Profit Margin = \frac{ROE}{Asset turnover} x Equity Multiplier$

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

Determining PB Ratio for Companies with Different Returns and Growth Assume that the present value of expected ROPI follows a perpetuity with growth g (Value = Amount/ [r - g]). Determine the theoretically correct PB ratio for each of the following companies A and B. Note: NOPAT = NOA » RNOA. Company Net Operating Assets Equity RNOA ROE Weighted Avg. Cost of Capital Growth Rate in ROPI $100 $100 19% 19% 10% 2% $100 $100 12% 12% 10% 4% A B Round answers to two decimal places. PB Ratio Company A Company B
Vijay
use EXCEL and provide Cell References for Calculations.
Right Answer?
a company debt/ total assesses ratio of 25% and b company 20% with return on total assets of 10% and 7% respectively, which firm has a greater return on equity?? could find it for me?
rofit margin = 9.2 % Capital intensity ratio = .53 Debt-equity ratio = .68 Net income = $ 103,000 Dividends = $ 52,000 Based on the above information, calculate the sustainable growth rate for Northern Lights Co. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
A company has current, trailing earnings of 3.2 per share. The company plans to plowback 0.41, a share of the earnings, at an ROE of 0.084. If the required rate of return is 0.095, what is the present value of the firm's growth opportunities? O -2.47 -2.60 -2.74 -2.37 -2.85
Based on the following information you have collected, what is the sustainable growth rate (SGR) for Leo's Photography Studio? Profit Margin Debt/Equity Ratio Capital Intensity Ratio Net Income Dividends O A. O B. O C. O D. 12.42% 8.52% 15.15% 13.63% 7.1% 0.60 0.75 $48,000 $10,000
An analyst has gathered the following information for a Company: Expected earnings per share $9.31 Expected dividends per share $1.96 Expected dividend growth rate 2.00% Required rate of return 5.00% Based on the information provided, the price/earnings ratio of this company is closest to: O A. 33.33 B. 7.02 O C. 20.00
Profit margin = 9.1% Capital intensity ratio = .52 Debt-equity ratio = .67 Net income = $102,000 Dividends = $50,500 Based on the above information, calculate the sustainable growth rate for Northern Lights Co. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Based on the following information, calculate the sustainable growth rate for Kaleb's Heavy Equipment: Profit margin Capital intensity ratio Debt-equity ratio Net income Dividends 8.1% .51 .67 $ 29,000 $19,720