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

question 78

Essay

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

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