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.

Question

Jessie Hanson

Business

9 June, 15:14

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.

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Answers (1)

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Javon Perkins · Answer 1

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