24. If the company pays of dividend of $2 per share, what is the payout ratio? 2

Question

24. If the company pays of dividend of $2 per share, what is the payout ratio?
25. What is the enterprise value for this company ets Liabilities Current Liabilities urrent Assets Cash Accounts receivable Inventories Total current assets Income Statement Total sales Cost of sales Gross Profit 50 Accounts payable 42 22 Notes payable/short-term debt7 17 102 89 Total Current liabilities 49 Selling & administrative expense Research and development Depreciation & Amortizati Operating Income Other income 34 Long-Term Assets Net property, plant, eqpt. Total long-term assets Long-Term Liabilities on. 121 Long-term debt 53 128 Total long-term liabilities 128 Total Liabilities Stockholders' Equity Total Liabilities and Earnings before interest and taxes (EBIT) Interest income (expense Pretax income Taxes Net Income 53 Total Assets All numbers in millions Current Stock Price Shares Outstanding 210 Stockholders' Equity -8 25 $20 5 million The balance sheet and income statement of a sample firm are shown above. Use to answer the remaining questions 24. If the company pays a dividend of $2 per share, what is the payout ratio? a, 1090 -b, 40% c.60% 25. What is the enterprise value for this company? a. $228 million b. $178 million c. $100 million 26. Sales for the last year were 300 million and net income was $27 million, and the year before that sales were 320 million and net income was $35.2 million. What can you conclude about the company's operating efficiency? a. The efficiency is deorading because the net profit margin is increasing

Explanation / Answer

24. The Dividend Payout Ratio = No of share * dividend / Net Income = 5*2/25 = 0.4 or 40%
24. Enterprise Value = Market value of Shares + Long term Debt - Cash = 20* 5 + 128 - 50 = 228-50 = 178million

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