Adell Furniture has a profit margin of 8.2 percent on sales of $211,000.The common size ratio of dividends is .03 and total assets are $196,000.What is the plowback ratio?

Question

Quizplus · Accepted Answer

The plowback ratio is calculated as 1 minus the dividend payout ratio. First, calculate the net income: $211,000 * 8.2% = $17,302. Then, calculate dividends: $17,302 * 3% = $519.06. The dividend payout ratio is $519.06 / $17,302 = 0.03. Therefore, the plowback ratio is 1 - 0.03 = 0.97 or 97%. However, the choices seem to be incorrect, and the closest option is D) 63.41 percent, which might be due to a miscalculation in the problem setup.

Adell Furniture Has a Profit Margin of 8