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 %
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 6P
Related questions
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 %](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F08380473-2cd9-40f2-93c8-927cbd0340d9%2F0765f875-f188-4cee-94be-588b5780df22%2F62ckce48_processed.png&w=3840&q=75)
Transcribed Image Text: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
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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:
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