The most recent financial statements for Bello Co. are shown here: Income Statem
ID: 2813547 • Letter: T
Question
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Current assets $19,700 $11,860 Deb$16,180 13,440 Fixed assets 29,700 Equity 25,380 Sales Costs Taxable income$ 6,260 Tota $41,560 Tota $41,560 Taxes (25%) 1,565 Net income $4,695 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 30 percent dividend payout ratio What is the internal growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g. 32.16.)Explanation / Answer
return on assets,ROA=net income/total assets
=4695/41560
=0.1130
plowbackratio,b=1-dividened payout ratio
b=1-0.3
=0.7
Internal growth rate=(ROA*b)/(1-ROA*b)
=0.1130*0.7/(1-0.1130*0.7)
=0.0791/0.9209
=0.08589
=8.59%