Company generated $15,000,000 in sales and had total operating

jagguarpaw January 18, 2017 0 Comments

Question: During 2015, a company generated $15,000,000 in sales…

During 2015, a company generated $15,000,000 in sales and had total operating and depreciation expenses of $9,500,000. Interest expense was $500,000. If this company’s tax rate is 35% and the retained earnings increased by $2,000,000, then how much of the net income was distributed to shareholders as dividends? (Hint: Determine the net income for the year and determine how much of it was re-invested back in the business and how much of it was paid out to shareholders.)