The shamrock vegetable company

Reference no: EM131137079

1. The Shamrock Vegetable Company has the following results.

Net sales	$6,000,000
Net total assets	4,000,000
Depreciation	160,000
Net income	400,000
Long-term debt	2,000,000
Equity	1,160,000
Dividends	160,000

a. Compute Shamrock's ROE directly. Confirm this using the three components.

b. Using the ROE computed in Part a, what is the expected sustainable growth rate for Shamrock?

c. Assuming the firm's net profit margin went to 0.04, what would happen to Shamrock's ROE?

d. Using the ROE in Part c, what is the expected sustainable growth rate? What if dividends were only $40,000?

Reference no: EM131137079

Questions Cloud

The regular payback period for each of the projects : 1. Your division is considering two investment projects, each of which requires an up-front expenditure of $25 million. You estimate that the cost of capital is 10 percent and that the investments will produce the following after-tax cash flows (i..

Calls arrive according to a poisson distrubiton : A community is served by two cab companies. Each company owns two cabs and both share the market equally. Call arrives at each company’s dispatching office at the average rate of 8 per hour. The averate time per ride is 12 minutes. Calls arrive accor..

What surprised you most about these readings : What surprised you most about these readings? Did the readings make you question your knowledge of the issues covered? How? Discuss which reading most resonates with your personal views. Provide examples.

Spending relative to the growth in gross domestic product : In your own words, explain the factors that you believe have contributed to the disproportionate growth in healthcare spending relative to the growth in Gross Domestic Product (GDP). Remember: If you use a resource, you must list it in APA (required)..

The shamrock vegetable company : a. Compute Shamrock's ROE directly. Confirm this using the three components. b. Using the ROE computed in Part a, what is the expected sustainable growth rate for Shamrock?

What segmentation-targeting strategies are being employed : Pick any product you would like and explain, from your point of view and opinion, who the target market is. Try to identify what segmentation strategy or strategies are being used and what targeting strategy is being employed. Provide examples to hel..

To maintain a minimum cash balance : The firm expects to collect 10 percent of sales in cash, 60 percent in one month, and 25 percent in two months with 5 percent in uncollectible bad debts. Sales for the previous November and December were $55,000 and $80,000, respectively.

Show the areas corresponding to total taxes collected : Suppose the government imposes an excise tax on movie tickets of $2 each. An excise tax is a per unit tax on suppliers. In the graph in Q2 b, show the changes in the equilibrium price and quantity. Show the areas corresponding to total taxes colle..

Different from randomized controlled trials : How are quality improvement studies different from randomized controlled trials? Which of these approaches provide the best evidence for care?

User Account

All Pages