A Firm Wishes to Maintain an Internal Growth Rate of 11

question 42

Multiple Choice

A firm wishes to maintain an internal growth rate of 11 percent and a dividend payout ratio of 24 percent.The current profit margin is 7 percent and the firm uses no external financing sources.What must the total asset turnover rate be?

• A)0.87 times
• B)0.90 times
• C)1.01 times
• D)1.15 times
• E)1.86 times

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Definitions:

Government Agency

An organization at the federal, state, or local level that administers specific functions on behalf of the government.

Subsidiaries

Companies that are controlled by a parent company through majority ownership or significant control over management decisions.

Disclosure Exemption

A provision allowing an entity to not disclose certain information that is normally required by accounting standards.

Government-related Entities

Entities that are controlled, jointly controlled or significantly influenced by a government.