87 A company released its latest financial statements: Net Income $2,500,000 Dividends declared $850,000 Total Equity $6,500,000 Total Debt $4,500,000 Total Assets $14,000,000 The company’s dividend growth rate is closest to: A 24% B 25% C 26% D 27%
Is it 25%? I rounded a bit and obviously this wasn’t a good question to round with but I think it’s 25
B, 25%, unless I’ve forgotten the formula.
g = ROE * retention Since you got 25 also it better be right
Does it make a difference if dividends weren’t yet paid?
B is right.
What study session is this? I can’t calculate the growth if i dont know the next period dividend.
Sure you can, growth rate = ROE* Retention Rate I have a question: why is that shareholder’s equity and liabilities don’t match total assets?
map1: Total Debt is not necessarily equal to Total Liabilities, and L+E = A, not Debt + E = A Also, it is B, but you have to modify dupont to be: (NI/Assets)(Assets/Equity) Then multiply times (1-(Dividends/NI)), the retention rate