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?

Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter4: Analysis Of Financial Statements
Section: Chapter Questions
Problem 15P: RETURN ON EQUITY AND QUICK RATIO Lloyd Inc. has sales of 200,000, a net income of 15,000, and the...
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Problem 3-26 Constraints on Growth

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?
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