Tinsley, Incorporated, wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .5. The profit margin is 5.4 percent, and the ratio of total assets to sales is constant at 1.63. What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the maximum growth rate possible? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Is a growth rate of 12 percent possible?
Tinsley, Incorporated, wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .5. The profit margin is 5.4 percent, and the ratio of total assets to sales is constant at 1.63. What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) What is the maximum growth rate possible? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Is a growth rate of 12 percent possible?
Financial Reporting, Financial Statement Analysis and Valuation
8th Edition
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Chapter12: Valuation: Cash-flow Based Approaches
Section: Chapter Questions
Problem 1CIC
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Problem 3-26 Constraints on Growth
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Tinsley, Incorporated, wishes to maintain a growth rate of 12 percent per year and a debt-equity ratio of .5. The profit margin is 5.4 percent, and the ratio of total assets to sales is constant at 1.63. |
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What dividend payout ratio is necessary to achieve this growth rate under these constraints? (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
|
What is the maximum growth rate possible? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
| Is a growth rate of 12 percent possible? |
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