A fiRm Currently Has Sales of $550,000, a 6% Profit

question 347

Multiple Choice

A firm currently has sales of $550,000, a 6% profit margin and a 40% dividend payout ratio. What is the anticipated amount of dividends to be paid to shareholders if sales are expected to increase by
5%?

• A) $13,200
• B) $13,860
• C) $34,650
• D) $220,000
• E) $231,000

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Definitions:

Provisions

Liabilities of uncertain timing or amount, set aside in a company’s financial statements to cover anticipated losses or obligations.

Events

Occurrences or actions that can have an impact on the operational, financial, or legal standing of an organization.

Capital Balances

The amount of funds contributed by owners or the net assets available in a business after liabilities have been subtracted.

Net Income

The amount of earnings after subtracting all costs and expenses from revenue, including taxes and other deductions. Representing a company's profit over a specified period.