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During 2017, company XYZ had sales 252189; costs 130794; depreciation expense 43813; interest expense 19808; tax...

During 2017, company XYZ had sales 252189; costs 130794; depreciation expense 43813; interest expense 19808; tax rate 35 percent.

a) Given this information what is company XYZ net income

b) Calculate company XYZ operating cash flow.

c) If company XYZ had additions to retained earnings 7206 in 2017. What is the dividend payout ratio? Express your answer as %.


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Answer #1

a)

Income before tax = Sales-Costs-Depreciation-interest

Tax= 35% of income before taxes

Income before taxes=252189-130794-43813-19808 =57774

Tax =35% of 57774 =20,221

Net income= income before taxes- tax =57774-20221=37553

b)

Opearting cash flow=Net income +depreciation+ interest = 37553+43813+19808=101174

c)

Net income=37553

Increase in retained earnings =7206

Hence dividend= net income- increase in retained earnings=37553-7206= 30347

Dividend payout ratio= dividend/ net income =30347/37553 =80.81%

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