It helps for forecasting on making certain financial decisions. The three groups that use these ratios are managers, potential investors or lenders, and stockholders. The reason the managers use these ratios, is to have a closer look and be able to identify situations that need their instant attention with in the firm. Potential investors are lenders used a ratio to determine if they should invest in the company or not. As for stockholders they mainly use this information for forecasting dividends, earnings on the free cash flow.
A divide by 100 B divide by 1000 C multiply by 100 D multiply by 1000 15 Which of the following is the smallest? A 0.07 7 C ----10 1 B -7 D 73% 7 A ----12 7 C ----16 7 B -9 7 D -8 5 Which one of these decimals could be rounded to 34.71? A 34.715 B 34.7 C 34.707 D 34.7039 1 6 What is -- as a percentage? 6 A 16% B 1.6% -C 16 2 % 3 D 60% 7 What is 37.5% of one day? A 10 hours B 8.6 hours C 9.6 hours D 9 hours 8 Increase $38 by 15%.
I believe the direct method is a better way for a business to keep track of cash flow because it accounts for every operating activity. This method may not be convenient for every company but it accounts for every receipt and payment, providing the company more details on each cash transaction. The indirect method is easier and it may be less expensive, it is focus on the difference between net income and cash flow from operating expenses. (Weygandt, Kimmel, & Kieso, 2010. p 618). This method converts net income to net cash from operating activities.
The basic answer is that share repurchases are great when the share price is undervalued, and not-so-great when the share price is overvalued. To put it into a more useful context, if you would otherwise reinvest your dividends or invest new capital into the company at current stock prices, then share repurchases are useful to you because the company basically does it for you. The alternative is that the company could pay you a higher dividend, but you’d be taxed on that dividend and reinvest it into the company anyway. On the other hand, if you would not reinvest dividends or invest new capital into the company at current prices, then share repurchases are not in alignment with your current outlook, and it would be better for you to receive a higher dividend. Something else to be considered is that when a company uses money for share repurchases when it could be paying a higher dividend instead, the company’s management is limiting your control and increasing theirs.
Assuming that growth in the CA segment stagnates, and that only heavy CA applicators would be interested in dispensing equipment the total market is still estimated at 19,240 users. About half of these users, i.e. ~10,000 firms have expressed an interest in investing in newer dispensing technology, leading us to believe that the market potential for the product is approximately 10,000 machines on a cautious basis. Assuming the growth projections for cyano-acrylate usage are accurate, the total number of firms purchasing the product in FY 1979 is estimated to be 270,000. Using these figures and assuming that both heavy and medium users (those buying between 1-9 pounds of cyano-acrylates per year) are potential customers; the maximum size of this market is estimated at 81,000 purchases.
Eisenhower communications is trying to estimate the first-year net operating cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue $10 million Operating costs (excluding depreciation) $ 7 million Depreciation $ 2 million Interest expense $ 2 million The company has a 40 percent tax rate, and its WACC is 10 percent a. What is the project’s operating cash flow for the first year? b. If this project would cannibalize other projects by $1 million of cash flow before taxes per year.
By using the information, manager can use cost of capital for restructure the market price and earning per share in order to bring advantage for company. By extension, it can help determine the decision whether to cancel or invest in project. Moreover, the cost of capital can help investors to determine the performance of the top management. With the intention of compare the ability of financial managers based on evaluation between the
There are several main advantages of going public. The first one is that company stock can be used to raise capital. The second one went to the company obtains increased prestige and visibility. And going public can help improve its financial condition by obtaining money that does not have to be repaid. What’s more, company stock in the form of stock options can be offered to employees and contractors as a meaningful form of incentive compensation.
The importance of an income statement therefore is to help in making an analysis of how the different decisions the business makes affect its level of profitability. The Cash flow Statement. It is a record of the amount of cash flowing in and out of a business over a given time period being examined. The statement is important to a business since it shows the ease by which a business can create an adequate level of liquidity or cash to finance its running operations. It also helps determine the amount of money available at the end of the business’s financial period which may be used for a subsequent period’s investment.
The interest you receive on the first investment is $110 per year for three years. You receive $330 on the second investment in the third year and nothing in the first two years. If your discount rate is 6%, what should you pay for each of these investments? Present Value of #1 = $110 + $110 + $110 = $294.03 (1.06) (1.06)2 (1.06)3 Present Value of #2 = $0 + $0 + $330 = $ 277.07 (1.06) (1.06)2 (1.06)3 You will pay more for investment #1 b) You can make two different new products at your plant. Product #1 is expected to earn no profit in the first year, $500 in the second year and $1,000 in the third year.