For a Firm with $3 Million in Total Assets,$400,000 in Net

question 63

Essay

For a firm with $3 million in total assets,$400,000 in net income,and $150,000 in dividend payments,first calculate the maximum rate of growth in sales without tapping external sources of funds.Next,show how that growth rate changes if the dividend payout ratio is reduced to 20%.Do these two points suggest that shareholders must be willing to trade dividends for growth?

---

Definitions:

Measurable

Capable of being quantified or expressed as a numerical value to assess the size, amount, or degree of something.

Mass Merchandiser

Retail businesses that sell a large variety of goods to consumers at low prices, typically in large stores or online.

Wal-Mart

An American multinational retail corporation that operates a chain of hypermarkets, discount department stores, and grocery stores.

Function-Level Goal

Specific objectives set for different functional areas within a company, such as marketing, finance, or production, to contribute to overall business strategy.