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Last year, net profits of Herd Inc. were two-sevenths of revenue. If the company declared a...

Last year, net profits of Herd Inc. were two-sevenths of revenue. If the company declared a dividend of $12 800 and five-ninths of the net profit was retained in the company, what was last year’s revenue?

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Answer #1
Assumed revenue= R
Net profit= R*2/7
Retention ratio= 5/9 of net profit
distribution ratio= 4/9 of net profit
Distribution = (R*2/7)*4/9
As per question distribution is 12800
(R*2/7)*4/9= $        12,800.00
(R*2/7)= 12800*9/4
(R*2/7)= $        28,800.00
R= 28800*7/2
R= $     100,800.00
So last year revenue was $ 100,800
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