Capital structure and growth plans

Assignment Help Finance Basics

Reference no: EM1337018

Sustainable growth. A firm has decided that its optimal capital structure is 100 percent equity financed. It perceives its optimal dividend policy to be a 40 percent payout ratio. Asset turnover is sales/assets - .8, the profit margin is 10 percent, and the firm has a target growth rate of 5 percent.

1. Is the firm's target growth rate consistent with its other goals?

2. If not, by how much does it need to increase asset turnover to achieve its goals?

3. How much would it need to increase the profit margin instead?

Reference no: EM1337018

Questions Cloud

Compiler would not compile the line of code in the center : In the following lines of code, the Miracle C compiler will not compile the line of code in center (float x = 1/a;). Why does this occur? How can it be corrected.

Concept of common and statutory law : The concept of common law vs. statutory law can be very confusing. Concise definitions are given with examples of each. Answer is original work derived from several years of teaching American Government.

Explain you are the brand manager for frito lay : Explain You are the brand manager for Frito Lay and you are at a party one weekend and Need full explanation and adding in some humor is appreciated

Steps to ensure flawless execution of business strategy : Analyze how HR can be used effectively to work cohesively with an organization's business strategy and explain what steps you could take to ensure flawless execution.

Capital structure and growth plans : Sustainable growth. A firm has decided that its optimal capital structure is 100 percent equity financed. It perceives its optimal dividend policy to be a 40 percent payout ratio.

Find the benefits of the two when developing a compiler : What is the difference between top-down and bottom-up parsing? What are the benefits of the two when developing a compiler? What are the disadvantages.

Utilizing demand and supply analysis to assist you : Utilizing demand and supply analysis to assist you, what are the effects on the exchange rate between the British pound and the Japanese.

Ethical and legal question within workplace : Your sales manager informs you that he has found a third world country that is desperate for heaters as it's population is freezing. You can sell the heaters at your cost and save your company. Do you sell the heaters or not. Why?

Identification of cost of market research firm : Consumer Focus is a marketing research firm that organizes focus groups for consumer-product companies. A Consumer Focus staff member attends every session to ensure that all the logistical aspects run smoothly.

User Account

All Pages