Author Question: Smith Motors Inc. manufactures, distributes, and services automotive parts and engines worldwide. ... (Read 32 times)

s.tung · **on:** Apr 25, 2021

Smith Motors Inc. manufactures, distributes, and services automotive parts and engines worldwide. Smiths' income statement for the year just ending is shown below. Assume that today is the first day of Year 2 and that Smith's common shares are trading at a price of $68. In its most recent Management Discussion and Analysis (MD&A) Smith's management forecast earnings-per-share of $6 for Year 2. If Smith maintains its Year 1 payout ratio, then what will the dividend (per share) be in Year 2?

Smith Motors Inc.

Income Statement

Year 1 ($000,000s)

Revenue	$20,995
COGS	15,624
SG&A	2,466
Dep. Exp.	247
EBIT	2,658
Int. Exp.	55
Pre-Tax Income	2,603
Income Tax	898
Net Income	1,705

Shares Outstanding (millions)	205
Total Common Dividends	$300.5

◦ $0.77
◦ $1.06
◦ $1.44
◦ $1.86
◦ $2.06

lkoler · **Reply #1 on:** Apr 25, 2021

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