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deep falls timber has net sales of $642,100, net income of $50,800, dividends paid of $12,700, total assets of $658,000, and total equity of $444,400. what is the internal growth rate? a) 5.83 percent b) 6.24 percent c) 6.15 percent d) 5.18 percent e) 7.70 percent

Respuesta :

If deep falls timber has $642,100 in net sales, $50,800 in net income, $12,700 in dividends paid, $658,000 in total assets, and $444,400 in total equity, its internal growth rate would be 6.15%.

Net Income 50800.00

Less: Dividends 12700.00

Retained earnings 38100.00

Retention ratio (Retained earnings/ Net income) 75.00%

Total Assets 658000.00

ROA = Net income / Total assets 7.72%

ROA* Retention ratio 5.79%

(1 - ROA *Retention Ratio) 94.21%

Internal Growth rate = (ROA *Retention ratio) / (1 - ROA *Retention ratio) 6.15%

Sales are computed as sales less cost of goods sold, selling, general and administrative costs, operating costs, depreciation, interest, taxes, and other costs. Net income (NI), often known as net earnings, is the difference between these two figures. Investors might use this figure to gauge the extent to which an organization's revenue outpaces its costs. This total assets figure can be found on an organization's income statement and serves as a gauge of profitability.

To determine their earnings per share, businesses use net income. Since net income is the last item on the income statement, business analysts frequently refer to it as the total assets bottom line. In the UK, analysts refer to NI as shareholder-attributable profit.

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