Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes): Income...
90.2K
Verified Solution
Link Copied!
Question
Accounting
Consider the following simplified financial statements for the Phillips Corporation (assuming no income taxes): Income Statement Sales $24,000 Assets Costs 12,600 Net income $11,400 Total Balance Sheet $10,600 Debt Equity $10,600 Total $4,200 6,400 $10,600 Phillips has predicted a sales increase of 10 percent. It has predicted that every item on the balance sheet will increase by 10 percent as well. Calculate the dividend paid. (DO not round your intermediate calculations.) HINT: Here you start by calculating the growth in assets (change in left hand side of balance sheet). We know that every category (debt and equity) on the right hand side of the Balance Sheet grows at the same rate as assets. So next we need to calculate the change in total equity because that change in equity is related to the new (pro forma) retained earnings. So next calculate the pro forma net income, and figure out how much can be paid in dividends (so that you have exactly the projected growth in equity left as your projected retained earnings). If the dividend is negative, then the firm will need to issue new shares of stock (can't finance growth in equity internally through retained earnings). Multiple Choice $11,881 $11,900 O $19,880 $11,874 $11.868
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
