Based on value line and number below i have too determine the time period of the
ID: 2419538 • Letter: B
Question
Based on value line and number below i have too determine the time period of the detailed forcast for which good estimates are possible , and of the simplified forcast for the more distant future. NIKE (NKE)corporation 2010-20141) Historical(2010-2014) 2)Near future(2015-2019) and TRansition stage(2020-2024)
It has to work on1) ROE- 2b(ploback)3) g(growth rate)
Historicla
Year
2010
2011
2012
2013
2014
ROE
0.196
0.217
0.214
0.222
0.249
b
0.144
0.160
0.155
0.158
0.175
g
2.82%
3.47%
3.32%
3.50%
4.35%
Near Future
Year
2015
2016
2017
2018
2019
ROE
0.258
0.255
0.305
0.355
0.310
b
0.220
0.220
0.220
0.220
0.220
g
5.68%
5.61%
6.71%
7.81%
6.82%
Transition Stage
Year
2020
2021
2022
2023
2024
ROE
0.291
0.272
0.253
0.234
0.215
b
0.216
0.211
0.207
0.202
0.198
g
6.27%
5.74%
5.22%
4.73%
4.25%
Year
2010
2011
2012
2013
2014
ROE
0.196
0.217
0.214
0.222
0.249
b
0.144
0.160
0.155
0.158
0.175
g
2.82%
3.47%
3.32%
3.50%
4.35%
Explanation / Answer
As per the histocal Data available, Company's return/ Earnings are growing every year and the Plowback Ratio is also growing with respect to the same.
Fundamantaly, it is stated that higher the plowback ratio, higher will be the growth of the company.
In the near future, plowback ratio should go higher every year in order to achieve maximum growth for the company.
At the Transition level, dividend payout ratio should be higher means that more dividends should be paid to inventors rather than to retain the profits, as this will maximise the stock price of the Company.
1) Historical Phase Year ROE Plowback Growth =ROE *Plowback Growth 2010 0.196 0.144 0.028224 2.82% 2011 0.217 0.16 0.03472 3.47% 2012 0.214 0.155 0.03317 3.32% 2013 0.222 0.158 0.035076 3.50% 2014 0.249 0.175 0.043575 4.35% 2) Near Future Year ROE Plowback Growth =ROE *Plowback Growth 2015 0.258 0.22 0.05676 5.68% 2016 0.255 0.22 0.0561 5.61% 2017 0.305 0.22 0.0671 6.71% 2018 0.355 0.22 0.0781 7.81% 2019 0.31 0.22 0.0682 6.82% 3) Transitional Phase Year ROE Plowback Growth =ROE *Plowback Growth 2020 0.291 0.216 0.062856 6.27% 2021 0.272 0.211 0.057392 5.74% 2022 0.253 0.207 0.052371 5.22% 2023 0.234 0.202 0.047268 4.73% 2024 0.215 0.198 0.04257 4.25%Related Questions
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