Planetary Travel Co
Question
12)Planetary Travel Co. has $165,000,000 in stockholders’ equity. Common stock is $60,000,000 and the
balance is retained earnings. The firm has $280,000,000 in total assets and 3 percent of this value is in cash. Earnings for the year are $23,000,000 and are included in retained earnings.
| a. | What is the legal limit on current dividends? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) |
| Legal limit on current dividends | $ |
| b. | What is the practical limit based on liquidity? (Do not round intermediate calculations. Input your answer in dollars, not millions (e.g., $1,234,000).) |
| Practical limit on current dividends | $ |
| c. | If the company pays out the amount in part b, what is the dividend payout ratio? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) |
| Payout ratio | % |
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