'Finance 3301 questions Essay\r'

'Tom has a DSO of 20 geezerhood. The company’s average occasional gross sales are $20,000. What is the level of its accounts receivable? (365 long time 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 kale margin of 10% and an equity multi-plier of 2. 0. Its sales are $100 one thousand jillion and it has total assets of $50 zillion. What is its ROE? () Answer: B A, 10% B, 40% C, 20% D, 25% The meat assets turnover = Sales/TA=$100/$50=2 ROE= (profit margin)(equity multi-plier)(Total assets turnover)=10%*2*2=40%\r\nChapter 9 When the firm’s sales bring upth esteem going higher, and its payout ratio impart () Answer: C A, Same B, Lower C, higher(prenominal) Broussard Skateboard’s sales are evaluate to increase by 15% from $8 million in 2012 to $9. 2 million in 2013. Its assets number $5 million at the end of 2012. Broussard is already at full cap acity, so its assets must grow at the same rate as communicate sales. At the 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.\r\nThe after-tax profit margin is forecasted to be 6%, and the forecasted payout ratio is 40%. Use the AFN equation to forecast Brous- sard’s additional funds needed for the coming year. take increase in assets †Increase in oral 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 caller-up’s balance sheet shows $300 million in debt, $50 million in favored stock, and $250 million in total common equity. Tony follow`s tax rate is 40%, rd =6%,rPS =5%,andrs =10%.\r\nIf Tony Company get majuscule 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 B, short-term C, No one Chapter 11 A company creates value when the spread between EROIC and WACC is lordlyâ€that is, when Answer: B A, EROIC ? WACC = 0 B, EROIC ? WACC > 0; C, EROIC ? WACC\r\n'