Question

This year CVS reported net income of $1,150 million and paid out dividends of $497 million....

This year CVS reported net income of $1,150 million and paid out dividends of $497 million. If net income is projected to increase by 3% next year, what is the projected amount of earnings available to be reinvested (in $ millions) next year? That is, what is the expected increase in retained earnings? Assume the dividend payout ratio is expected to remain constant.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1
Particulars Year 1 Year 2
Net income 1150 1184.5 (Increased by 3% from year 1)
Dividend 487 501.64 (As dividend payout ratio remains constant, apply 42.35% on 1184.5)
Retained earnings 663.00 682.86
Increase in retained earnings 19.86
Dividend payout ratio = net income/ dividend
= 487/ 1150
= 0.42347826
= 42.35%

The projected amount of earnings available to be reinvested (in $ millions) next year is Rs.682.86.

The expected increase in retained earnings is Rs.19.86.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. Dividends come out of a company’s net income. Dividends are reported on a per share...
1. Dividends come out of a company’s net income. Dividends are reported on a per share basis. Earnings Per Share (EPS) is a company’s net income per share of stock. The payout ratio is the percentage of earnings that a company pays out as dividends. So, to calculate payout ratio, you dividend by the EPS. a. If a company pays a dividend of $1.2 and its EPS is $3, what is the payout ratio? A company will often try to...
Suppose a company had $9 million net income for year 2014, and paid out dividends of...
Suppose a company had $9 million net income for year 2014, and paid out dividends of $0.5 per share. The company has 10 million shares outstanding. If the company had $35 million retained earning at the end of year 2013, the balance of the retained earnings now (year 2014) is $_____ millions. Answer in millions, and round it to a whole million. Do not include the $ sign or comma, e.g., 55 (for $55 million).
MJ INC. paid out $44.8 million in total common dividend and reported $289.4 million of retained...
MJ INC. paid out $44.8 million in total common dividend and reported $289.4 million of retained earnings at year-end. The prior year’s retained earnings were $191million. What was the net income ? Assume that all dividends declared and paid. Please show work
Electronics World Inc. paid out $29.9 million in total common dividends and reported $342.6 million of...
Electronics World Inc. paid out $29.9 million in total common dividends and reported $342.6 million of retained earnings at year-end. The prior year's retained earnings were $250.1 million. What was the net income? Assume that all dividends declared were actually paid. Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of...
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $96 Dividends $32 Addition to retained earnings $64 For the coming year, the company is forecasting a 15% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 75% of sales. Austin's tax rate, interest expense, and dividend payout ratio...
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of...
PRO FORMA INCOME STATEMENT Austin Grocers recently reported the following 2016 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $96 Dividends $32 Addition to retained earnings $64 For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 75% of sales. Austin's tax rate, interest expense, and dividend payout ratio...
Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Sales $700 Operating...
Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (25%) 40 Net income $120 Dividends $40 Addition to retained earnings $80 For the coming year, the company is forecasting a 35% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 60% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to...
Austin Grocers recently reported the following 2018 income statement (in millions of dollars): Sales $700 Operating...
Austin Grocers recently reported the following 2018 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $96 Dividends $32 Addition to retained earnings $64 For the coming year, the company is forecasting a 35% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 75% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to...
eBook Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Sales $700...
eBook Austin Grocers recently reported the following 2019 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (25%) 40 Net income $120 Dividends $40 Addition to retained earnings $80 For the coming year, the company is forecasting a 25% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 60% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected...
Austin Grocers recently reported the following 2018 income statement (in millions of dollars): Sales $700 Operating...
Austin Grocers recently reported the following 2018 income statement (in millions of dollars): Sales $700 Operating costs including depreciation 500 EBIT $200 Interest 40 EBT $160 Taxes (40%) 64 Net income $96 Dividends $32 Addition to retained earnings $64 For the coming year, the company is forecasting a 20% increase in sales, and it expects that its year-end operating costs, including depreciation, will equal 60% of sales. Austin's tax rate, interest expense, and dividend payout ratio are all expected to...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT