1 dupont identity x corp has net income of 20 million sales, Ask an Expert

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1. DuPont Identity. X Corp. has net income of $20 million, Sales of $200 million, asset turnover of .5, and debt-equity ratio of 30%. a. What is its return on equity? b. If X increases its debt-equity ratio to 50%, what happens to its return on equity?

2. Z Corp. has an ROE of 15 percent and a dividend payout ratio of 60 percent. a. What is the company’s sustainable growth rate? b. Can the company’s growth rate be different from its sustainable growth rate? How so? (Hint: What does the sustainable growth rate assume about external financing?) c. How can the company increase its sustainable growth rate?

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Financial Management, Finance

Category:- Financial Management
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