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:

International Expansion

The process by which a business grows beyond its home country, entering new markets globally.

Employment Practices

Policies and practices related to the management of individuals in a workplace setting, including hiring, training, evaluating, and terminating employees.

North American Free Trade Agreement

A trade agreement between Canada, Mexico, and the United States aimed at reducing trade barriers and promoting economic integration.

General Agreement on Tariffs and Trade

An international treaty aimed at reducing trade barriers and promoting global economic trade.