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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Definitions:

Threatens

Communicating an intention to cause harm or disadvantage to someone in order to compel action or inaction.

Higher Wages

Increased compensation for employment, often reflecting a higher skill level requirement, more responsibilities, or adjustment to living costs.

Union Representative

An individual elected or appointed to represent and protect the interests of union members in discussions with employers.

Right to Strike

The legal right of workers to refuse to work as a form of protest against conditions or policies considered unfair by the workforce.