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Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Question a
.A company has a revenue of 500m, EBITDA margin of 20%, no cash and an interest coverage ratio of 2x. Can you find the net leverage ratio (net debt / EBITDA)?
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- Question A What do current ratios, leverage ratios, profitability ratios, and activity ratios all measure? What are good ratios for each of these different kinds of ratios and what do they imply about the company? Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line1. Explam tne concept Of risk-feturn trade-off. What I Can Do vibui lern lo elovol an lo lovol nsvg bluow alsubivibnt ACTIVITY 4.6 BUSINESS APPLICATIONS Solve and show your solution and explanations in a separate paper. 1. CM Company borrowed P 2 000 000 from a bank on June 30, 2015. The loan has an annual interest rate of 10% and the principal is payable at the end of every quarter amounting to P 25 000. The first quarterly payment will be on September 30, 2015. Prepare an amortization schedule for 2015 until the loan is fully paid on June 30, 2017. How much interest expense is incurred in 2015 and 2016 with respect to this loan? 2. A firm is evaluating two projects. The firm's cost appropriateAttempts: Average: /2 5. Problem 4.03 (DUPONT Analysis) eBook Henderson's Hardware has an ROA of 15%, a 5% profit margin, and an ROE of 23%. What is its total assets turnover? Do not round intermediate calculations. Round your answer to two decimal places. What is its equity multiplier? Do not round intermediate calculations. Round your answer to two decimal places.
- 2. UNIV Dreamers Publishing has a choice of publishing one of two financial economics books. It expects the sales period for each to be extremely short, and it estimates profit probabilities as follows: BOOK A BOOK B Probability Profit Profit Probability 0.10 0.20 PhP 2,000 PHP 2,300 PhP 1,500 PhP 1.700 0.30 0.40 0.30 PhP 2.600 0.40 PhP 1.900 0.20 PhP 2.900 0.10 PhP 2.100 Calculate the expected profit, standard deviation, and coefficient of variation for each of the books. If you were asked which of the two to publish, what would be your advice?Fill in the table using the following information.Assets required for operation: $3,000Case A—firm uses only equity financingCase B—firm uses 30% debt with a 10% interest rate and 70% equityCase C—firm uses 50% debt with a 12% interest rate and 50% equityIf your answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. A B C Debt outstanding $ $ $ Stockholders' equity $ $ $ Earnings before interest and taxes $660.00 $660.00 $660.00 Interest expense $ $ $ Earnings before taxes $ $ $ Taxes (40% of earnings) $ $ $ Net earnings $ $ $ Return on stockholders’ equity % % % What happens to the rate of return on the stockholders' investment as the amount of debt increases? The rate of return on the stockholders' investment as the amount of debt increases.No Excel You open a new margin account with an initial margin requirement of 65% and a maintenance margin requirement of 45%. You purchase stock for $24,512, borrowing to the full extent allowable. Assuming there are no dividends or interest paid to or from the margin account, at what price could you first receive a margin call?
- Fill in the table using the following information.Assets required for operation: $4,000Case A—firm uses only equity financingCase B—firm uses 30% debt with an 8% interest rate and 70% equityCase C—firm uses 50% debt with a 12% interest rate and 50% equityIf the answer is zero, enter "0". Round your answers for monetary values to the nearest cent. Round your answers for percentage values to one decimal place. A B C Debt outstanding $ $ $ Stockholders' equity $ $ $ Earnings before interest and taxes $400 $400 $400 Interest expense $ $ $ Earnings before taxes $ $ $ Taxes (40% of earnings) $ $ $ Net earnings $ $ $ Return on stockholders’ equity % % % What happens to the return on the stockholders’ equity as the amount of debt increases? Why did the rate of interest increases in case C? The return on stockholders' equity as the firm becomes financially leveraged. The rate…Finance what is cost of equity as an effective annual rate given that they pay semi annually, current dividend is $1.05 and expected to grow at 1.8% forever and the current share price is 28.70 Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Do not provide Excel Screet shot rather use tool table Answer completely.You have the following information about two firms, Debt Free, Incorporated and Debt Spree, Incorporated. Both firms have the same prospects for sales and EBIT, and both have the same level of assets, tax rate and borrowing rate. They differ in their use of debt financing. Scenario Bad year Normal year Good year Total assets Tax rate Debt Equity Borrowing rate Sales Interest expense for Debt Free Interest expense for Debt Spree $200 $275 $380 Debt Free $ 250 21% EBIT $12 $ 34 $ 51 $0 $ 250 16% Required: a. Calculate the interest expense for each firm: Debt Spree $ 250 21% $150 $ 100 16%
- Destin Company Information: Total Assets $940,000 Total Liabilities $600,000 Cost of debt 5.8% Risk-free rate 1.97% Beta 0.89 Market Return 10% A) Using CAPM, what is cost of equity? (so you are not confused, the opportunity cost of using equity is the return we were expecting to receive on the equity). a)8.03% b)7.77% c) 9.12% d) 8.9% B) What is Destin's Weighted Average Cost of Capital? a) 6.22% b) 5.89% c) 6.07% d) 5.72%Current Attempt in Progress Ayayai Corp. has current assets of $1850000 and current liabilities of $640000. If they pay $339000 of their accounts payable, what will their new current ratio be? 6.1:1 O 0.7:1 O 2.9:1 O 5.0:1 Save for Later Attempts: 0 of 1 used Submit Answer MacBook AirQuestion A .Fill in the blank: In general, emerging financial markets are _________ with/from the global capital market. Group of answer choices: partially-segmented fully integrated completely-segmented Full explain this question and text typing work only We should answer our question within 2 hours takes more time then we will reduce Rating Dont ignore this line