Question

A firm wishes to maintain an internal growth rate of 8.5 percent and a dividend payout...

A firm wishes to maintain an internal growth rate of 8.5 percent and a dividend payout ratio of 43 percent. The current profit margin is 9 percent, and the firm uses no external financing sources. What must total asset turnover be?

Homework Answers

Answer #1

Retention Ratio = 100 - dividend payout ratio

= 100-43

= 57%

profit margin = Net Income / Turnover = .09

Net Income = .09*Turnover

internal growth rate = (ROA*Retention Ratio) / (1-(ROA*Retention Ratio)) = .085

(ROA*.57) / (1-(ROA*.57)) = .085

ROA*.57 = .085* (1-(ROA*.57))

= .085 - .04845ROA

ROA*.57 + .04845 ROA = .085

0.61845 ROA = .085

ROA = .085/0.61845

= 0.13744037513

ROA = Net Income / Total Assets = 0.13744037513

.09*Turnover / Total Assets = 0.13744037513

Total Assets = .09*Turnover / 0.13744037513

Total Assets = 0.65482941177*Turnover

total asset turnover = Turnover/Total Assets

=  Turnover/0.65482941177*Turnover

= 1/0.65482941177

= 1.53

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
A firm wishes to maintain an internal growth rate of 8.5 percent and a dividend payout...
A firm wishes to maintain an internal growth rate of 8.5 percent and a dividend payout ratio of 43 percent. The current profit margin is 9 percent, and the firm uses no external financing sources. What must total asset turnover be? (Enter your answer rounded to 4 decimal places. For example, 1.23456 should be entered as 1.2346)
A firm wishes to maintain an internal growth rate of 9.6 percent and a dividend payout...
A firm wishes to maintain an internal growth rate of 9.6 percent and a dividend payout ratio of 43 percent. The current profit margin is 7.7 percent, and the firm uses no external financing sources. What must total asset turnover be?
A firm wishes to maintain an internal growth rate of 5.3 percent and a dividend payout...
A firm wishes to maintain an internal growth rate of 5.3 percent and a dividend payout ratio of 40 percent. The current profit margin is 6.8 percent and the firm uses no external financing sources. What must total asset turnover be?
A firm wishes to maintain an internal growth rate of 9.75 percent and a dividend payout...
A firm wishes to maintain an internal growth rate of 9.75 percent and a dividend payout ratio of 43 percent. The current profit margin is 6.5 percent and the firm uses no external financing sources. What must total asset turnover be? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
A firm wishes to maintain a growth rate of 13.2 percent and a dividend payout ratio...
A firm wishes to maintain a growth rate of 13.2 percent and a dividend payout ratio of 36 percent. The ratio of total assets to sales is constant at 0.70, and profit margin is 7.9 percent. If the firm also wishes to maintain a constant debt-equity ratio, what must it be?
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 8.5 percent a year, a debt–equity...
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 8.5 percent a year, a debt–equity ratio of .53, and a dividend payout ratio of 26 percent. The ratio of total assets to sales is constant at 1.22.    What profit margin must the firm achieve in order to meet its growth rate goal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Profit margin             %
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 8.5 percent a year, a debt–equity...
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 8.5 percent a year, a debt–equity ratio of .53, and a dividend payout ratio of 26 percent. The ratio of total assets to sales is constant at 1.22.    What profit margin must the firm achieve in order to meet its growth rate goal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Profit margin             %
Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity...
Sig, Inc., wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .43. The profit margin is 5.9 percent, and the ratio of total assets to sales is constant at 1.80. What dividend payout ratio is necessary to achieve this growth rate under these constraints?
High Flyer, Inc., wishes to maintain a growth rate of 15.75 percent per year and a...
High Flyer, Inc., wishes to maintain a growth rate of 15.75 percent per year and a debt–equity ratio of .85. The profit margin is 4.9 percent, and total asset turnover is constant at 1.09.    What is the dividend payout ratio? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Dividend payout ratio             %    What is the maximum...
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 10 percent a year, a debt–equity...
Fulkerson Manufacturing wishes to maintain a sustainable growth rate of 10 percent a year, a debt–equity ratio of .37, and a dividend payout ratio of 34 percent. The ratio of total assets to sales is constant at 1.38.    What profit margin must the firm achieve in order to meet its growth rate goal? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)    Profit margin             %
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT