- Vertical analysis | Amount | Percent | Current assets | $100,000 | 25% | Property, plant, and equipment | 300,000 | 75% | Total assets | $400,000 | 100% | 10. A common measure of profitability is the - return on common stockholders' equity ratio 11. Which one of the following would be considered a long-term solvency ratio? - Debt to total assets ratio 12. The current ratio is - used to evaluate a company's liquidity and short-term debt paying ability 13.
Select the correct answer. $199,990 | | | $755,322 | | | $955,312 | | | $139,358 | | 8. Variable costs as a percentage of sales for Leamon Inc. are 61%, current sales are $517,801. and fixed costs are $197,934. How much will operating income change if sales increase by $41,139?
DAKG was developing a new strategy to measure quality using Statistical Process Control (SPC), a technique previously used in manufacturing. Annette Kluck, head of Operations Development, created a tool called Prozessmessung und Verbesserung (PMV) which was implemented at DAKG in two phases. The first phase was the way an application was entered measuring the quality number of process steps and the second was using these measurements to improve quality and performance by establishing control measures that compare variances against upper and lower limits to see if the item fits within the expected, specific, predictable and normal variation levels
Current ratio is widely used for evaluating liquidity and short-term debt paying ability” (Kimmel, Weygandt, & Kieso, , p. 710). For 2013 the Hershey Company had current assets of $2,487.3 million and current liabilities of $1408.0. To calculate the current ratio you take the current assets which is $2,487.3 million dived by the current liabilities which is $1408.0 million and the current ratio equals 1.8 percent. What this measures tells us it that the Hershey Company “current ratio of 1.8 means that for every dollar of current liabilities, it has $1.8 of current assets” (Kimmel et al., p.710).
a. $0 b. $100 c. $200 d. $1,000 e. $1,200 4. To measure a firm's solvency as completely as possible, we need to consider a. The firm's relative proportion of debt and equity in its capital structure b.
CHECKLIST OF KEY FIGURES For Exercises and Problems in Kimmel, Weygandt, Kieso Financial Accounting: Tools for Business Decision Making, Fifth Edition Chapter 1 Exer. No. 1-4 Net income $8,400. 1-5 Net income $4,576.1. 1-6 Ending retained earnings $278,000.
A1 of 3 Formulas involved on the WACC calculations Corporate Finance - MBA 2009 Note written by Prof. Carles Vergara-Alert & Prof. Pedro Saffi 1 Objective This note tries to clarify the different assumptions and formulas used to calculate the Weighted Average Cost Of Capital (WACC) that you will find in different textbooks and articles. 2 The WACC formula The WACC formula is a weigthed average of the cost of equity and the after-tax cost of debt: W ACC = E D+E RE + D D+E (1 − τ )RD (1) being RE the cost of equity, RD the cost of debt, τ the corporate tax, E the market value of the firm’s equity, and D the market value of the firm’s debt. Note that sometimes we call V to the sum of D and E, therefore, V = D + E. Sometimes, not all the financing is provided by debt and equity. As an example, let us assume that some financing is provided by preferred stock as well as equity and debt. The WACC formula has to be modified to include the main sources of long-term financing of the firm such as preferred stock: W ACC = E D P RE + (1 − τ )RD + RP D+E+P D+E+P D+E+P where RP is the cost of preferred stock and P is the market value of the firm’s preferred stock.
$35,000 0.8 1st Investment, 40,000 1.4 2nd Investment Total $75,000 ($35,000/$75,000)(0.8) + ($40,000/$75,000)(1.4) = 1.12 6-2 Required Rate of Return Assume that the risk-free rate is 6% and that the expected return on the market is 13%. What is the required rate of return on a stock that has a beta of 0.7? rRF = 6%; rM = 13%; b = 0.7; Solve for : rs = ? rs = rRF + (rM - rRF)b = 6% + (13% - 6%)0.7 = 10.9% 6-7 Required Rate of Return Suppose rRF = 9%, rM = 14%, and bi = 1.3. a. What is ri, the required rate of return on Stock i?
APV vs. WACC Problem Given the following information, answer questions 1 and 2 below. Company and market data: Rf = 4% Rm = 10% βu = 0.9 D/V (target) = 40% RD = 4% Tc = 30% Project CFs: I0 = 1000, CF1 = 300, CF2 = 400, CF3 = 500 1) Calculate the project’s value using WACC 2) Calculate the project’s value using APV -Oops, we can’t until we know the financing (debt) pattern over time. (a) OK, assume the project is financed with 60% debt which is paid off in three equal, annual installments. (b) Now assume instead of (a) that the debt is rebalanced to be consistent with the firm’s target debt ratio (i.e. D/V = 40%).
To make it matches with chosen Rf rate the appropriate measure of risk premium is Spread between S&P 500 Composite Returns and Long-term U.S . Government Bond Returns. The market risk premium is estimated as the difference between the arithmetic average of annual holding period returns on a market and the arithmetic average of annual holding returns on a portfolio of government securities. Thus, it will be 7.43%. β = Beta of the Asset: The case provides equity beta: 0.97.