Increase the cost and amount of assets necessary to generate each dollar of sales because it will increase the company’s total assets turnover. Decrease the amount of debt financing us
Q: Which of the following actions should Paperang Inc. take if it wants to reduce its cash conversion…
A: Cash conversion cycle is that the total period of time taken by the firm to finish its operating…
Q: True or False The cash conversion cycle is the sum of the inventory conversion period, the…
A: “Since you have posted a question with multiple sub-parts, we will solve first three sub parts for…
Q: Airport Motors, Inc. has $2,305,800 in current assets and $854,000 in current liabilities. The…
A: Current Ratio = Current AssetsCurrent Liabilities
Q: A firm wishes to maintain an internal growth rate of 7.7 percent and a dividend payout ratio of 35…
A: Retention ratio = 1 - Dividend payout ratio = 1 - 0.35 = 0.65
Q: Required: Use these data to answer each of the following questions with explanations: a) Is it…
A: Ratio Analysis The purpose of measuring the Ratio analysis which indicate that the strength and…
Q: You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relating to…
A: Accounting Ratios are the financial tools used by the stakeholders of a company to evaluate the…
Q: You have been asked by your CEO to evaluate, analyse and calculate commonly used ratios relating to…
A: Financial ratios: Financial ratios can be defined as the comparison of the various items reported in…
Q: As a firm grows, it must support increases in revenue with new investments in assets. The…
A: Self-supporting growth rate: The self-supporting growth rate is the sustainable growth rate. It is…
Q: In general, as a company increases the amount of short-term financing relative to long-term…
A: Explanation : An increase in the proportion of short-term financing will not affect a company’s…
Q: yons, CEO of Lyons Solar Technologies, is concerned about his firm’s level of debt financing. The…
A: Unlevered firm: An unlevered firm is a firm that has no debt, and the financing is done solely…
Q: In finance, as in accounting, the two sides of the balance sheet must be equal. we valued the asset…
A: High leverage in a company refers that the proportion of debt is significantly higher than a normal…
Q: Which of the statements below is TRUE? A) The increase in working capital accounts necessary to…
A: Working capital can be defined as the money needed for the day-to-day operations of the business. It…
Q: How would answer this question? You are estimating your company's external financing needs for the…
A: SOLUTION- Reducing the collection period is the change that we need to make to company’s operating…
Q: In each of the theories of capital structure, the cost of equity increases as the amount of debt…
A: Capital Structure means a combination of different sources of finance used by a corporation to…
Q: The managers of a firm wish to expand the firm's operations and are trying to determine the amount…
A: The method of supplying funding for commercial activities, acquisitions, or investments is known as…
Q: pany borrows, the higher will be its tax shields, therefore a company will always prefer to issue…
A: WACC is weighted average cost of capital after tax.
Q: Based on M & M with taxes and without taxes, how much time should a financial manager spend…
A: Note: As per the bartelby guidelines only the first part will be answered. Kindly post the remaining…
Q: Consider the following two potential transactions: (i) borrow from a bank; and (ii) use the…
A: Financial leverage determines the proportion of debt capital in respect to the total capital…
Q: According to Modigliani & Miller Theory (M&M), WACC of the firm is not affected by the capital…
A: Given, Return on assets 16% Cost of debt is 10% % of debt to capital is 45%.
Q: · A company has to decide the proportion in which it should have its own finance and outsider's…
A: "Hi, Thanks for the question, since you posted multiple questions, we will answer the first question…
Q: Which of the following is true? O If a firm's volume of credit sales decreases, then its liquidity…
A: Following is the correct option.
Q: return on investment
A: First option is wrong because the return on investment will increase if the invested capital…
Q: Garwryk, inc., which is financed with debt and equity, presently has a debt ratio of 78 percent.…
A: Total assets depend on the components of debt and equity and changes according to that.
Q: As a firm grows, it must support increases in revenue with new investments in assets. The…
A: Formula for sustainable growth rate is Sustainable growth rate =ROA*Retention ratio1-(ROA*Retention…
Q: Which of the following would likely encourage a firm to increase the debt in its capital structure?…
A: There are two correct options for the question. a) Increase in corporate tax rate would mean that by…
Q: According to MM propositions, which of the following statements best describes the consequence of…
A: The M&M Theorem, or the Modigliani-Miller Theorem is a capital structure theory developed by…
Q: Lincoln Industries' current ratio is 0.5. Considered alone, which of the following actions would…
A: The currant ratio is a short term liquidity measure ratio which can be calculated as follows Currant…
Q: Which of the following is a valid reason for a firm not to use as much debt as it can raise? Group…
A: The use of more debt results in an increase in the firm's cost of capital as the proportion of…
Q: Which of the following is correct when the company is deciding if it will undertake an additional…
A: AFN is a tool for estimating how much money a business will need in the future. A corporation that…
Q: Which of the following is true. The firm’s ultimate financial goal is to maximize its revenues…
A: Financial goal: The main goal of the firm is to maximize the shareholder's wealth and maximize the…
Q: Which of the following is true? a. If the payment term of n/20 shifted to 5/10, n/20 to start…
A: Solution:- Cash discount means the discount offered by the entity to its customers is they pay…
Q: Leverage relates to how much of someone else’s money a business or individual is using to finance…
A: Leverage refers to the use of borrowed money by a company to fund or to finance its growth or its…
Q: The pressure of corporate debt repayment has increased year by year, and the total profit has also…
A: There are two types of financing for every organisation, namely, equity financing and debt…
Q: Bulldogs inc. will least likely experience which of the following if the firm shifts its credit…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: Which one of the following factors would likely cause a firm to increase its use of debt financing…
A: Debt financing refers to the issue of debt for raising funds in a company.
Q: Which of the following is a disadvantage of long-term debt as a means of company financing? Group…
A: Funds are very important and necessary for smooth running of a business organization. A business has…
Q: Which of the following are assumptions of the self-supporting growth model? Check all that apply.…
A: Answer: The self-supporting rate of growth is the pace at which the company will theoretically…
Q: The internal rate of return (IRR) can best be described as: A. the discount rate at which a set of…
A: It is one of capital budgeting discounting techniques which is used as a metric in financial…
Q: The firm's self-supporting growth rate is influenced by the firm's capital intensity ratio. The more…
A: The self supporting growth rate is also known as sustainable growth rate and it is the growth rate…
Q: Companies that face large investments they cannot finance internally through the retention of…
A: Floatation costs are the expenses incurred to raise capital such as, brokerage fee, underwriting…
Q: Which of the following is most consistent with using debt to reduce agency costs or conflicts?…
A: Statement number 4 is consistent with using debt to reduce agency costs or conflicts.
Q: Generally speaking, the cost of debt is cheaper than the cost of equity. Does it imply that a firm…
A: Cost of debt is the charge which a fir must pay to the bond holder for borrowing the money. This…
Q: If Alex Corporation takes out a bank loan to purchase a machine used in production and…
A: Equity Multiplier: It represents the portion of the firm's assets financed by the shareholder's…
Q: Which of the following statements are true? OCalifornia Corp has relied on equitý to finance its…
A: Ratio analysis shows the company's liquidity, efficiency and profitability of the company,
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Which of the following is true regarding a company assuming more debt? Select one: a. Assuming more debt is always bad for the company b. Assuming more debt reduces leverage c. Assuming more debt can be good for the company as long as they earn a return in excess of the rate charged on the borrowed funds d. Assuming more debt is always good for the companyCheck all that apply. Use more debt financing in its capital structure and increase the equity multiplier. Use more equity financing in its capital structure, which will increase the equity multiplier. Increase the interest rate on its notes payable or long-term debt obligations because it will reduce the company's net profit margin. Increase the efficiency of its assets so that it generates more sales with each dollar of asset investment and increases the company's total assets turnover.Leverage relates to how much of someone else’s money a business or individual is using to finance its operations. Discuss leverage and the various debt ratios used by an organization. Discuss the benefits and perils of too much leverage. Choose a debt ratio and discuss the importance of monitoring that ratio. For example, the time's interest earned ratio is an important ratio to monitor because it shows if a firm can pay the interest payments on its debt each month. The benefits of leverage allow a firm to use borrowed funds to generate income. Too much leverage can make it difficult for a company to make those payments each month.
- A firm wants to strengthen its financial position. Which of the following actions would increase its current ratio? 1. b. Reduce the company's days' sales outstanding to the industry average and use the resulting cash savings to purchase plant and equipment. 2. d. Borrow using short-term debt and use the proceeds to repay debt that has a maturity of more than one year. 3. e. Issue new stock and then use some of the proceeds to purchase additional inventory and hold the remainder as cash. 4. a. Use cash to increase inventory holdings. 5. c. Use cash to repurchase some of the company's own stock.In general, as a company increases the amount of short-term financing relative to long-term financing, the A)Greater the risk that it will be unable to meet principal and interest payments. B)Leverage of the firm increases. C)Likelihood of having idle liquid assets increases. D)Current ratio increases.As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from ncreases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has $200,000,000 in assets. Its sales revenues last year were $100,000,000 with a net income of $2,500,000. The company distributed $135,000 as dividends to its shareholders last year. Given the information above, what is Cold Duck Manufacturing Inc.'s sustainable growth rate? 0.56% 1.20% 0.07% 3.89% Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply. The firm maintains a constant net profit margin. The firm maintains a constant ratio of assets to equity. The firm uses…
- Managing companies to a Target Optimal Capital Ratio requires which of the following for managers to think through debt has the cheapest cost of capital, but adding too much will increase cost of debt and cost of equity cost of debt requires confidence in achieving certain credit ratings, resulting in better debt cost confidence cost of equity requires estimates on risk, returns and growth expectations on tax rates being relatively stable all of the aboveThe cost of equity rises as the quantity of debt rises in each of the capital structure theories. So, why don't financial managers employ as little debt as feasible to keep equity costs low? After all, aren't finance managers expected to increase a company's value?9. Which of the following strategy enables a manager to report a higher current ratio? Select one: a. Pay off accounts payable prior to year-end b. Purchase more fixed assets c. Purchase more fixed income securities d. Invest more in long term debt
- As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting, or sustainable, growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider the following case of Cold Duck Manufacturing Inc.: Cold Duck Manufacturing Inc. has no debt in its capital structure and has $300,000,000 in assets. Its sales revenues last year were $210,000,000 with a net income of $7,000,000. The company distributed $155,000 as dividends to its shareholders last year. Given the information above, what is Cold Duck Manufacturing Inc.’s sustainable growth rate? 0.05% 2.33% 3.91% 0.51% Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all that apply. The firm pays out a constant proportion of its earnings as dividends.…As a firm grows, it must support increases in revenue with new investments in assets. The self-supporting growth model helps a firm assess how rapidly it can grow, while maintaining a balance between its cash outflows (increases in noncash assets) and inflows (funds resulting from increases in liabilities or equity). Consider this case: Green Caterpillar Garden Supplies Inc. has no debt in its capital structure and has $150 million in assets. Its sales revenues last year were $75 million with a net income of $5 million. The company distributed $1.60 million as dividends to its shareholders last year. What is the firm’s self-supporting, growth rate? (Note: Do not round your intermediate calculations.) 1.08% 2.32% 4.60% 1.00% Which of the following are assumptions of the self-supporting growth model? Check all that apply. The firm’s total asset turnover ratio remains constant. The firm pays no dividends. The firm’s liabilities…Consider the effect that corporate profit taxes have on investing. Look back at Figure 15.4. Suppose that the r line is the rate of return a firm earns before taxes. If corporate profit taxes are imposed, the firm’s after-tax returns will be lower (and the higher the tax rate, the lower the after-tax returns). If the firm’s decisions about R&D spending are based on comparing after-tax returns with the interest-rate cost of funds, how will increased corporate profit taxes affect R&D spending? Does this effect modify your views on corporate profit taxes? Discuss.
