a. Use the information below from Tournment Sporting Goods\'s annual financial s
ID: 2772384 • Letter: A
Question
a. Use the information below from Tournment Sporting Goods's annual financial statements to calculate the actual and sustainable growth rate for each year from 2010 - 2014.
b. Do you think Tournment Sporting Goods is having a problem financing its growth? Is the increase in dividends a good idea for the company?
Tournment Sporting Goods ($ in thousands) 2009 2010 2011 2012 2013 2014 Sales 477.84 491.62 706.52 792.01 876.52 1,088.46 Net income - 43.27 26.31 38.48 44.84 25.76 Total assets - 477.06 648.42 664.26 697.16 982.63 Equity - 346.32 426.01 465.85 432.91 553.27 Dividends - - - 0.80 1.65 2.22Explanation / Answer
Answer:
a)
b) The payout ratio has been consitently low though dividend has been incresing. So the major portion of income is retained. Incresing dividend is not a bad idea, because it still remains much minute portion of total income.
The net income is not growing with the increse in equity. So the financing is not an issue but the it seems the operating performance has not been well maintained over the years.
Tournment Sporting Goods ($ in thousands) 2009 2010 2011 2012 2013 2014 a Sales 477.84 491.62 706.52 792.01 876.52 1,088.46 b Net income - 43.27 26.31 38.48 44.84 25.76 c Total assets - 477.06 648.42 664.26 697.16 982.63 d Equity - 346.32 426.01 465.85 432.91 553.27 e Dividends - - - 0.8 1.65 2.22 f ROE (b/d) 0.124942 0.061759 0.082602 0.103578 0.04656 g Payout ratio (e/b) 0.00% 0.00% 2.08% 3.68% 8.62% h Retention Ratio(1-g) 100.00% 100.00% 97.92% 96.32% 91.38% i SGR (f*h) 12.49% 6.18% 8.09% 9.98% 4.25%Related Questions
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