Friday, May 17, 2019

Finance 3301 questions Essay

Tom has a DSO of 20 days. The companys average daily gross revenue are $20,000. What is the level of its accounts receivable? (365 days in a year) DSO=Receivables/(Annual sales/365)=20 days So, Receivables/($20,000/365days)=20 days Receivables/54. 79=20, Receivables=$1095. 89 A company has a profit margin of 10% and an legality multi-plier of 2. 0. Its sales are $100 one million million and it has total assets of $50 million. What is its ROE? () say B A, 10% B, 40% C, 20% D, 25% The Total assets turnover = Sales/TA=$100/$50=2 ROE= (profit margin)(equity multi-plier)(Total assets turnover)=10%*2*2=40%Chapter 9 When the firms sales harvest-tide rate going higher, and its payout ratio will () Answer C A, Same B, Lower C, Higher Broussard skates sales are expected to append by 15% from $8 million in 2012 to $9. 2 million in 2013. Its assets totaled $5 million at the end of 2012. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At t he end of 2012, current liabilities were $1. 4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals.The after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. mathematical function the AFN equation to forecast Brous- sards additional funds needed for the coming year. Required increase in assets Increase in spontaneous liabilities Increase in retained earnings = AFN AFN=($5/$8)*$1. 2 ($1. 4/$8)*$1. 2-$9. 2*6%*(1-40%)=0. 75 0. 21 0. 33=21% Chapter 10 Tony Companys balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total vernacular equity. Tony Companys tax rate is 40%, rd =6%,rPS =5%,andrs =10%.If Tony Company get capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Wd=30% Wps=5% Ws=65% WACC=Wd*rd*(1-T)+Wps*rps+ws*rs=30%*6%(1-40%)+5%*5%+65%*10%=0. 0108+0. 000125+0. 065=7. 59% What kinds of the T-bonds is the best proxy for the risk-free rate is the yield on? Answer A A, long-term B, short-run C, No one Chapter 11 A company creates value when the spread between EROIC and WACC is positivethat is, when Answer B A, EROIC ? WACC = 0 B, EROIC ? WACC 0 C, EROIC ? WACC

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