FIN 415 Al Yamamah CH4 What is Major Manuscripts, Incs Retention Ratio HW Question # 01 1. What is Major Manuscripts, Inc.’s retention ratio? 2. Major M

FIN 415 Al Yamamah CH4 What is Major Manuscripts, Incs Retention Ratio HW Question # 01

1. What is Major Manuscripts, Inc.’s retention ratio?

2. Major Manuscripts, Inc. does not want to incur any additional external financing. The dividend payout ratio is constant. What is the firm’s maximum rate of growth?

3. If Major Manuscripts, Inc. decides to maintain a constant debt-equity ratio, what rate of growth can it maintain assuming that no additional external equity financing is available.

Question # 2: Slide # 24 (Comprehensive Problem)

XYZ has the following financial information for 2019:

• Sales = $2M, Net Inc. = $0.4M, Div. = $0.1M

• C.A. = $0.4M, F.A. = $3.6M

• C.L. = $0.2M, LTD = $1M, C.S. = $2M, R.E. = $0.8M

1) What is the sustainable growth rate?

2) If 2020 sales are projected to be $2.4M, what is the amount of external financing needed, assuming XYZ is operating at full capacity, and profit margin and payout ratio remain constant? FIN 415
Chapter 04
Question # 01
1. What is Major Manuscripts, Inc.’s retention ratio?
2. Major Manuscripts, Inc. does not want to incur any additional external financing. The dividend payout
ratio is constant. What is the firm’s maximum rate of growth?
3. If Major Manuscripts, Inc. decides to maintain a constant debt-equity ratio, what rate of growth can it
maintain assuming that no additional external equity financing is available.
Question # 2:
Slide # 24 (Comprehensive Problem)
XYZ has the following financial information for 2019:
•
Sales = $2M, Net Inc. = $0.4M, Div. = $0.1M
•
C.A. = $0.4M, F.A. = $3.6M
•
C.L. = $0.2M, LTD = $1M, C.S. = $2M, R.E. = $0.8M
1) What is the sustainable growth rate?
2) If 2020 sales are projected to be $2.4M, what is the amount of external financing needed,
assuming XYZ is operating at full capacity, and profit margin and payout ratio remain constant?

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