A Firm Has Adopted a Policy Whereby It Will Not

question 1

Multiple Choice

A firm has adopted a policy whereby it will not seek any additional external financing.Given this,what is the maximum growth rate for the firm if it has net income of $12,100,total equity of $94,000,total assets of $156,000,and a 40 percent dividend payout ratio?

• A)4.88 percent
• B)5.11 percent
• C)6.62 percent
• D)7.67 percent
• E)8.37 percent

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Definitions:

Cost of Goods Sold

Expenses directly connected with making the products a company offers for sale.

FOB Destination

A shipping term indicating that the seller is responsible for the cost and risk of transport until the goods reach the buyer's location.

Buyer's Place

The agreed location where the buyer takes ownership of goods purchased, significant in determining shipping costs and liability.

Perpetual Inventory System

An inventory management approach where inventory levels are updated in real time with each sale or purchase.