Blue Co. is funded by both debt and equity with a total debt to total asset ratio of 40%. If the firm has a retained earnings breakpoint of P2,450,000, how much is the additions to the retained earnings during the year?

Blue Co. is funded by both debt and equity with a total debt to total asset ratio of 40%. If the firm has a retained earnings breakpoint of P2,450,000, how much is the additions to the retained earnings during the year?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 6P: In its most recent financial statements, Del-Castillo Inc. reported 70 million of net income and 900...

See similar textbooks

Related questions

Q: Selzer Inc. sells all its merchandise on credit. It has a profit margin of 4 percent, days sales…

A: The return on equity(ROE) measures the financial performance of the company. It measures the…

Q: McCormack co. Wishes to maintain a growth rate of 6 percent a year, a debt equity ratio of 0.49, and…

A: Calculation of profit margin: Answer: Profit margin is 12.76%

Q: TRY Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is…

Q: Manufacturing Inc. reported sales of $743,000 at the end of last year, but this year, sales are…

A: Hello. Since your question has multiple parts, we will solve first question for you. If you want…

Q: Lauryn’s Doll Co. had EBIT last year of $47 million, which is net of a depreciation expense of $4.7…

A: Given, EBIT $47 million Depreciation $4.7 million capital expenditures $7.25 million Net working…

Q: A company finances its operations with 60 percent debt and the rest using equity. The annual yield…

A: Given: Debt (D) = 60% Equity (E) = 40% Cost of debt (rd) = 4.1% Cost of equity (re) = 12.4% Tax =…

Q: Bridgette Inc. has forecasted that its net income will be P400,000. The company has debt ratio of…

A: Given Information : Net Income = P400,000 Debt ratio = 30%Project Investment = P500,000 Number of…

Q: The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet…

A: Sustainable growth rate: the highest growth rate which would be without having additional equity or…

Q: Lilly Inc has a DSO of 20 days, and its annual sales are $3,550,000. What is its accounts receivable…

A: (Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…

Q: XYZ anticipates earning $1,800,000 and paying $300,000 in dividends this year. XYZ's capital…

A: equity break point=retained earningfraction of equity

Q: Altamonte Telecommunications has a target capital structure that consists of 60% debt and 40%…

A: Given: Capital budgeting = $2,000,000 Net income = $1,300,000 Debt weight = 60% Equity weight = 40%

Q: Serenity Systems Inc. is expected to pay a $2.50 dividend at year end (D, = $2.50), the dividend is…

A: The weighted average cost of capital is the weighted average of the cost of equity, cost of debt and…

Q: Dahlia Colby, CFO of Charming Florist Ltd., has created the firm’s pro forma balance sheet for the…

A: Proforma balance sheet is the estimated or projected balance sheet for future period of time.

Q: IF a corporation earns $240,000 and the payout ratio ( proportion distributed) is 20 percent, what…

A: Given: Total earnings = $240000 Payout ratio =20% = 0.20

Q: firm has net income of $2.3 million.the firms capital structure consists of equity of $15 million…

A: Sustainable Growth Rate(SGR) is the maximum growth rate that can be sustained by the company without…

Q: The newspaper reported last week that Tisch Enterprises earned $34.07 million this year. The report…

A: Retention ratio is the percentage of earnings of a company which a company retains for different…

Q: Cold Duck Manufacturing Inc. reported sales of $743,000 at the end of last year, but this year,…

A: Additional Funds Needed(AFN) represents the amount of money that company is required to raise from…

Q: Blue Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is…

A: FCF1 = P 150,000,000 Growth rate (g) = 4% Debt to equity (D/E) = 0.25 Cost of debt = Rd = 5% Cost of…

Q: a During the year, Lasko's repaid $12,500 in long-term debt, borrowed $8,400, paid $611 in interest…

A: Payback period is the period within which the sum invested by the company in a project will be…

Q: A firm generated $697,000 in Sales Revenue, on which it earned Net Income of $139,400. The firm…

A: In sustainable growth rate assumption, the firm will not change its debt equity relationship. We…

Q: Network Communications has total assets of $1,400,000 and current assets of $600,000. It turns over…

A: Recall the basic equation of accounting: Assets = Liabilities + Equity = Debt + Equity Or, A = D + E…

Q: The firm has a net income of $2.3 million. The firm's capital structure consists of Equity of $15…

A: Given information: Net income is $2.3 million Equity is $15 million, Debt is $10 million Company…

Q: NEKO Inc. has forecasted that its net income will be P400,000. The company has debt ratio of 30%.…

A: Net income (NI) = P400,000 Debt ratio = 30% Equity ratio (ER) = 100%-30% = 70% Investment…

Q: National Co. had P24,000,000 in sales last year. The company's net income was P500,000, its total…

A: The ratio analysis helps to analyse the financial statements of the business with assets and…

Q: Last year Justine Corp. had sales of P315,000 and a net income of P17,382 and its year-end assets…

A: Du Pont analysis is a technique that is used to decompose the different drivers of the return of…

Q: Sora Industries has 65 million outstanding shares, $127 million in debt, $59 million in cash, and…

A: Free cash flow firm value model Under free cash flow valuation, the value of the firm is the sum of…

Q: Green Fire, Inc., has sales of $60 million, total assets of $42 million, and total debt of $18…

A: The return on assets is reflective of profitability ratio which will help in finding out the rate of…

Q: In 2016, the Allen Corporation had sales of $61 million, total assets of $43 million, and total…

A: given sales=$61 million total asset = $43 million total liabilites = $15 million interest rate=5.8%…

Q: XYZ anticipates eaming $1,800,000 and paying $300,000 in dividends this year. XYZ's capital…

A: Given:Anticipates earnings=$1800000Dividend=$300000Capital structure=20% debt and 80% equityTax…

Q: The most recent financing statements for throwing copper co. Are shown here: income statement: sales…

Q: A firm has a debt-to-equity ratio of 50 percent. Currently, it has interest expense of 500,000 on…

A: Computation of total equity is as follows: Debt to Equity Ratio=50%Debt to Equity Ratio=Total…

Q: he newspaper reported last week that Tisch Enterprises earned $34.17 million this year. The report…

A: Hi, as per our policy we will answer the first three parts. Kindly repost the remaining parts…

Q: Tomey Supply Company’s financial statements for the most recent fiscal year are shown below. The…

Q: It was reported last week that Blue Bell Enterprises earned $18.5 million this year. The report also…

A: Growth rate = Retention ration * Retrun of equity

Q: Hendo Inc. is constructing its pro forma financial statements for this year. At years end, Assets…

A: Assets= $650,000 Accounts Payable= $175000 Sales = $ 825000 Growth rate= 12% Common Stock= $175000…

Q: A company retains 7,50,000 out of its current earnings. The expected rate of return to the…

A: Retained Earnings (RE) are the aggregate sum of a company's profits that are kept for internal…

Q: The most recent financial statements for Mixton, Incorporated, are shown here: Income Statement…

A: Net Income: It is the sum of revenue that is left in the business after paying off all the costs of…

Q: At last year’s end, total assets for Roberts Inc. were $1.2 million and accounts payable were…

A: At last year’s end, total assets for Roberts Inc. were $1.2 million and accounts payable were…

Q: Based on these information, how much is the firm value after accounting for excess earnings?

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: Dahlia Colby, CFO of Charming Florist Ltd., has created the firm's pro forma balance sheet for the…

A: The next year's sales are $330 million which has grown by 20 percent. So, the current year's sales…

Q: Bulldogs Inc. has forecasted that its net income will be P400,000. The company has debt ratio of…

A: Answer) Under residual model, dividend is paid to common stockholders after deduction of amount to…

Q: (Using common-size financial statements) The S&H Construction Company expects to have total sales…

A: Pro-Forma Income Statement Sales $1,54,00,000 Cost of Goods Sold ($15400000 * 62%) $95,48,000…

Q: The newspaper reported last week that SunRise Enterprises earned $34.19 million this year. The…

A: In this case, first, we have to calculate the growth rate & then we would calculate the earnings…

Q: constant 35 percent dividend payout ratio and has no plans to issue new equity. Any financing needed…

Q: The total assets of Blue Co. is funded by both debt and equity with a debt to equity ratio of 100%.…

A: Here discuss about the details of to find out the additional amount which are added into the…

Question

100%

Definition Definition Remaining net income of the company after the required dividends are paid to shareholders. This surplus money is usually invested back into the business to expand its business operations or launch a new product.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Similar questions

The Kretovich Company had a quick ratio of 1.4, a current ratio of 3.0, a days’ sales outstanding of 36.5 days (based on a 365-day year), total current assets of $810,000, and cash and marketable securities of $120,000. What were Kretovich’s annual sales?
Payne Products had $1.6 million in sales revenues in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $1 million of fixed assets and intends to keep its debt ratio at its historical level of 60%. Payne’s debt interest rate is currently 8%. You are to evaluate three different current asset policies: (1) a restricted policy in which current assets are 45% of projected sales, (2) a moderate policy with 50% of sales tied up in current assets, and (3) a relaxed policy requiring current assets of 60% of sales. Earnings before interest and taxes are expected to be 12% of sales. Payne’s tax rate is 40%. What is the expected return on equity under each current asset level? In this problem, we have assumed that the level of expected sales is independent of current asset policy. Is this a valid assumption? Why or why not? How would the overall risk of the firm vary under each policy?
Chasse Building Supply Inc. reported net cash provided by operating activities of $243,000, capital expenditures of $112,900, cash dividends of $35,800, and average maturities of long-term debt over the next 5 years of $122,300. What is Chasses free cash flow and cash flow adequacy ratio? a. $94,300 and 0.77, respectively c. $130,100 and 1.06, respectively b. $94,300 and 0.82, respectively d. $165,900 and 1.36, respectively
The Moore Corporation has operating income (EBIT) of 750,000. The companys depreciation expense is 200,000. Moore is 100% equity financed, and it faces a 40% tax rate. What is the companys net income? What is its net cash flow?