A Firm with 30% Total Debt Ratio,total Assets of $10

question 62

Essay

A firm with 30% total debt ratio,total assets of $10 million,and an ROE of 14% has been paying out 60% of earnings to shareholders in the form of dividends.Sales are expected to increase by 10% this year,a faster growth rate than usual.Will external funding be required under these conditions? Will the debt-equity ratio remain constant?

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Definitions:

Fibula

A long, thin bone located in the lower leg, lateral to the tibia, playing a key role in stabilizing the ankle and supporting lower leg muscles.

Tarsals

A group of seven bones in the foot situated between the lower leg bones and the metatarsals, contributing to foot's structure and movement.

Tibia

The larger and stronger of the two bones in the lower leg, responsible for supporting the majority of the body's weight.

Patella

The patella, commonly known as the kneecap, is a small bone located in front of the knee joint, within the tendon of the quadriceps muscle, and it protects the knee joint.