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Author Question: Smith Motors Inc. manufactures, distributes, and services automotive parts and engines worldwide. ... (Read 41 times)

plus1

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on: Apr 25, 2021
Smith Motors Inc. manufactures, distributes, and services automotive parts and engines worldwide. Smith's 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 $88. In its most recent Management Discussion and Analysis (MD&A) Smith's management forecast earnings-per-share of $5 for Year 2. If Smith maintains its Year 1 dividend per share in Year 2, then what will its Year 2 payout ratio be?

Smith Motors Inc.
Income Statement
Year 1 ($000,000s)
Revenue$20,995
COGS15,624
SG&A2,466
Dep. Exp.247
EBIT2,658
Int. Exp.55
Pre-Tax Income2,603
Income Tax898
Net Income1,705
​​
Shares Outstanding (millions)205
Total Common Dividends$300.5

◦ 25.3%
◦ 26.3%
◦ 27.3%
◦ 28.3%
◦ 29.3%
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by plus1 on Apr 25, 2021

heyhey123

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Reply #1 on: Apr 25, 2021
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plus1

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Reply 2 on: Apr 25, 2021
YES! Correct, THANKS for helping me on my review

shailee

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Reply 3 on: Yesterday
Excellent

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