Question

Assume the profit margin and dividend payout ratio are constant. By what amount will retained earnings increase if sales are projected to increase by 11 percent? Currently, the firm’s sales =$4,700, net income is $420, total assets=7890, dividends=125, A/P =790, LTD= 3130, and common stock=2780, and retained earnings =1190.

Answer 1

Answer:

The amount will retained earnings increase if sales are projected to increase by 11 percent is $327,45

Explanation:

In order to calculate the amount will retained earnings increase if sales are projected to increase by 11 percent we would have to make the following calculation:

amount will retained earnings increase=(net income-dividends)*increase percentage

amount will retained earnings increase= ($420-$125)*1.11

amount will retained earnings increase= $ 327.45

The amount will retained earnings increase if sales are projected to increase by 11 percent is $327,45