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Accounting Essay

2023 words - 9 pages

Stop and Go has a 5 percent profit margin and a 44 percent dividend payout ratio. The total asset turnover is 1.60 and the debt-equity ratio is .58. What is the sustainable rate of growth? 
| 7.62 percent |
| 8.62 percent |
| 6.61 percent |
| 4.93 percent |
| 5.99 percent |

Which one of the following statements is correct?
| Pro forma financial statements must assume that no dividends will be paid. |
| Pro forma statements are limited to a balance sheet and income statement. |
| Net working capital needs are excluded from pro forma computations. |
| Pro forma statements must assume that no new equity is issued. |
| Pro forma statements are projections, not ...view middle of the document...

The company maintains a constant 30 percent dividend payout ratio and a constant debt−equity ratio. |

Required: |

What is the maximum increase in sales that can be sustained assuming no new equity is issued? (Do not round your intermediate calculations.) |

rev: 09_17_2012
| $2,787.16 |
| $6,925.55 |
| $7,025.55 |
| $3,673.66 |
| $7,125.55 |

Phil is working on a financial plan for the next three years. This time period is referred to as which one of the following?
| current financing period |
| planning horizon |
| financial range |
| short-run |
| planning agenda |

Which one of the following terms is defined as dividends paid expressed as a percentage of net income?
| dividend payout ratio |
| dividend portion |
| dividend retention ratio |
| dividend yield |
| dividend section |

Which one of the following will increase the maximum rate of growth a corporation can achieve?
| decrease in the dividend payout ratio |
| reduction in the retention ratio |
| increase in corporate tax rates |
| avoidance of external equity financing |
| decrease in sales given a positive profit margin |

Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes): |

  Income Statement | Balance Sheet |
  Sales | $19,000   |   Assets | $9,300   |   Debt | $5,900   |
  Costs | 13,900   |   |   |   Equity | 3,400   |
  Net income | -------------------------------------------------
$5,100   |   Total | -------------------------------------------------
$9,300   |   Total | -------------------------------------------------
$9,300   |

Phillips has predicted a sales increase of 10 percent. It has predicted that every item on the balance sheet will increase by 10 percent as well. |

Required: |
Calculate the dividend paid. (Do not round your intermediate calculations.) |

rev: 09_17_2012
| $5,253 |
| $5,270 |
| $16,480 |
| $5,260 |
| $5,256 |

If the Garnett Corp. has a 21 percent ROE and a 24 percent payout ratio, what is its sustainable growth rate? (Do not round your intermediate calculations.) |

rev: 09_17_2012
| 23.24% |
| 5.31% |
| 18.51% |
| 22.62% |
| 18.99% |

You are developing a financial plan for a corporation. Which of the following questions will be considered as you develop this plan?

I. How much net working capital will be needed?
II. Will additional fixed assets be required?
III. Will dividends be paid to shareholders?
IV. How much new debt must be obtained?
| II and III only |
| I, III, and IV only |
| I and IV only |
| I, II, III, and IV |
| II, III, and IV only |

Which one of the following policies most directly affects the projection of the retained earnings balance to be used on a pro forma statement?
| net working capital policy |
| capital budgeting policy |
| dividend policy |
| capacity utilization policy |
| capital structure policy |

Which one of the following ratios identifies...

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