Calculate the payout and plowback ratios

Reference no: EM13273088

A company has announced $50,000 in net income after paying taxes of $26,000 and interest of $20,000. It intends to pay $17,000 of net income as dividends. Its assets have averaged $600,000 over the past year, during which its total debt ratio has averaged 40%. Given this information, answer the following about the company's profitability:

a. Calculate the ROA and ROE.
b. Calculate the payout and plowback ratios.
c. What effect will the plowback have on the company's growth in equity?

Reference no: EM13273088

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