Question

A firm begins operations with $300,000 in equity on its balance sheet. The equity holders borrow...

A firm begins operations with $300,000 in equity on its balance sheet. The equity holders borrow an additional $200,000 to purchase assets. The assets produce sales of $1,000,000 and a net profit margin of 10%. Since the firm is growing, it retains all earnings and does not pay dividends.

- Calculate ROE

- What is the equity balance at the end of the year?

- Calculate the sustainable growth rate. Assume no new equity has been issued.

- What is the cash flow to stockholders for the year?

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
17-3 17-04 Vertical Analysis of Balance Sheet Balance sheet data for Alvarez Company on December 31,...
17-3 17-04 Vertical Analysis of Balance Sheet Balance sheet data for Alvarez Company on December 31, the end of two recent fiscal years, follows: Current Year Previous Year Current assets $340,000 $210,000 Property, plant, and equipment 520,000 487,500 Intangible assets 140,000 52,500 Current liabilities 200,000 97,500 Long-term liabilities 410,000 322,500 Common stock 110,000 105,000 Retained earnings 280,000 225,000 Prepare a comparative balance sheet for both years, stating each asset as a percent of total assets and each liability and stockholders'...
Balance Sheet Presentation of Available-for-Sale Investments During Year 1, its first year of operations, Galileo Company...
Balance Sheet Presentation of Available-for-Sale Investments During Year 1, its first year of operations, Galileo Company purchased two available-for-sale investments as follows: Security Shares Purchased Cost Hawking Inc. 610 $22,021 Pavlov Co. 1,650 31,020 Assume that as of December 31, Year 1, the Hawking Inc. stock had a market value of $43 per share and the Pavlov Co. stock had a market value of $34 per share. Galileo Company had net income of $170,300 and paid no dividends for the...
Balance Sheet The following balance sheet contains errors. ATLAS SERVICES CO. Balance Sheet For the Year...
Balance Sheet The following balance sheet contains errors. ATLAS SERVICES CO. Balance Sheet For the Year Ended May 31, 20Y5 Assets   Current assets:   Cash $ 12,000   Accounts payable 47,900   Supplies 4,800   Prepaid insurance 17,400   Land 400,000   Total current assets $482,100 Property, plant, and equipment:   Building $ 225,000   Equipment 90,000   Total property, plant, and equipment 315,000 Total assets $797,100 Liabilities Current liabilities:   Accounts receivable $ 40,800   Accumulated depreciation—building 54,600   Accumulated depreciation—equipment 32,400   Net loss 44,200 Total liabilities $172,000 Stockholders’ Equity   Wages...
A firm begins the year with $25,000 in assets, of which $10,000 is depreciable equipment, and...
A firm begins the year with $25,000 in assets, of which $10,000 is depreciable equipment, and $16,000 in owners’ equity. Its debt carries an interest rate of 5%. Revenue 30,000 Total operating costs 22,500 Deprecation rate 10% Investment in new equipment 2,200 (this does not get depreciated this year) Profits tax rate 25% Dividend payout ratio 40% What is the coverage ratio? What are its before- and after-tax profits for the year and ROE? How much does it pay in...
Cash Dividends The Stockholders' Equity section of Jackson Company's balance sheet as of January 1, 2017,...
Cash Dividends The Stockholders' Equity section of Jackson Company's balance sheet as of January 1, 2017, appeared as follows: Preferred stock, $100 par, 8%, 2,000 shares issued and outstanding $200,000 Common stock, $10 par, 5,000 shares issued and outstanding 50,000 Additional paid-in capital 300,000 Total contributed capital $550,000 Retained earnings 400,000 Total stockholders’ equity $950,000 The notes that accompany the financial statements indicate that Jackson has not paid dividends for the two years prior to 2017. On July 1, 2017,...
Derby Company has sales of $300,000 and profit margin of 9%. It pays $18,000 as dividends....
Derby Company has sales of $300,000 and profit margin of 9%. It pays $18,000 as dividends. Its assets total $200,000 and total equity is $120,000. Calculate its sustainable growth rate. A firm with annual sales of $450 million cut its average collection period from 60 days to 45 days. By how much is the accounts receivable balance change? Indicate decrease by negative and write answer in millions of dollars.
On its December 31, 20x6, balance sheet, Block Corporation reported its stockholders’ equity as follows: Common...
On its December 31, 20x6, balance sheet, Block Corporation reported its stockholders’ equity as follows: Common stock—$5 par value, 1,000,000 shares authorized, 100,000 shares issued and outstanding $500,000 Paid-in capital in excess of par value, common 100,000 Retained earnings 400,000 Total stockholders’ equity $1,000,000 During 20x7, the following transactions occurred: 1. Reacquired 2,500 shares at $7 per share. 2. Sold 1,200 shares of treasury stock at $8 per share. 3. Sold 500 shares of treasury stock at $6 per share....
P11-10 (Static) Preparing the Stockholders’ Equity Section of the Balance Sheet and Evaluating Dividend Policy LO-11-1,11-3,11-4,11-5,...
P11-10 (Static) Preparing the Stockholders’ Equity Section of the Balance Sheet and Evaluating Dividend Policy LO-11-1,11-3,11-4,11-5, 11-7 The following information was extracted from the records of Cascade Company at the end of the fiscal year after all adjusting entries were completed: Common stock ($0.01 par value; 200,000 shares authorized, 54,000 shares issued, 52,000 shares outstanding) $ 540 Additional paid-in capital 456,000 Dividends declared and paid during the year 22,000 Retained earnings at the end of the year 312,000 Treasury stock...
At the beginning of Year 2, Jones Company had a balance in common stock of $300,000...
At the beginning of Year 2, Jones Company had a balance in common stock of $300,000 and a balance of retained earnings of $15,000. During Year 2, the following transactions occurred: · Issued common stock for $90,000 · Earned net income of $50,000 · Paid dividends of $8,000 · Issued a note payable for $20,000 Based on the information provided, what is the total stockholders' equity on December 31, Year 2?
Dividends for Preferred and Common Stock The Stockholders' Equity category of Greenbaum Company's balance sheet as...
Dividends for Preferred and Common Stock The Stockholders' Equity category of Greenbaum Company's balance sheet as of December 31, 2017, appeared as follows: Preferred stock, $100 par, 9%    2,000 shares issued and outstanding $200,000 Common stock, $10 par   40,000 shares issued and outstanding 400,000 Additional paid-in capital 500,000 Total contributed capital $1,100,000 Retained earnings 900,000     Total stockholders' equity $2,000,000 The notes to the financial statements indicate that dividends were not declared or paid for 2015 or 2016. Greenbaum...