A Company Has Announced $50,000 in Net Income After Paying

question 92

Essay

A company has announced $50,000 in net income after paying taxes of $26,000 and interest of $20,000.They intend to pay $17,000 of net income as dividends.Their assets have averaged $600,000 over the past year, during which their total debt ratio has averaged 40 percent.Given this information, answer the following about the company's profitability:
Calculate the ROA and ROE.
Calculate the payout and plowback ratios.
What effect will the plowback have on the company's growth in equity?

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Definitions:

Centrated Thinking

A type of thought process in early childhood development where the child focuses on one salient aspect of a situation, neglecting other important factors.

Postformal Thought

A stage of cognitive development proposed beyond Piaget's formal operational stage, characterized by the understanding that answers to questions can vary depending on circumstances and personal perspectives.

Dialectical Thinking

A form of thinking that involves recognizing and integrating opposing viewpoints and ideas, often leading to the synthesis of a new understanding or solution.

Predicaments

Difficult, perplexing, or trying situations that require a solution.