Gremlin Media Inc.has realized tremendous growth in recent years.Last year the firm realized an ROE of 41.16%.If the firm was in a 40% marginal tax bracket,had an asset turnover ratio of 2.1,a profit margin of 14%,and a leverage ratio of 2,what was the firm's retention ratio?
A)0.70
B)1.00
C)0.50
D)There is not enough information to answer this question.

Question

Quizplus · Accepted Answer

The retention ratio is calculated as the portion of net income that is retained in the company rather than being paid out as dividends. The information provided (ROE, tax bracket, asset turnover ratio, profit margin, leverage ratio) does not directly allow us to calculate the retention ratio without knowing the dividend payout or the net income figures.