Answered: The firm X has sales of $420,000, a tax…

The firm X has sales of $420,000, a tax rate of 32%, the payout ratio of 35%, and a net profit margin of 6%. What is the addition to retained earnings? a. $8,316 b. $16,380 c. $12,837 d. $10,503

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

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Question

The firm X has sales of $420,000, a tax rate of 32%, the payout ratio of 35%, and a net profit margin of 6%. What is the addition to retained earnings?

a. $8,316

b. $16,380

c. $12,837

d. $10,503

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

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