QUESTION Suppose the trade-off theory of capital structure is true. Can you predict how companies” debt ratios should change over time? How do these predictions differ from the pecking-order theory”s? Answer: The capital structure of a company is how it finances its operations using debt and equity as the sources of funds. The major issue […]
QUESTION Explain why the NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future, is more sensitive to changes in the cost of capital than is the NPV of a short-term project. In NPV method, the net present value is calculated […]
QUESTION Assume a perfectly competitive market with no corporate or personal taxes. Companies A and B each earn gross profits of P and differ only in their capital structureA is wholly equity-financed and B has debt outstanding on which it pays a certain $100 of interest each year. Investor X purchases 10 percent of the […]
QUESTION Big-Deal Construction Company specializes in building dams. During Years 3, 4, and 5, three dams were completed. The first dam was started in Year 1 and completed in Year 3 at a profit before income taxes of $120,000. The second and third dams were started in Year 2. The second dam was completed in […]
QUESTION Lookhere.Com and StopIn.Com enter into a reciprocal agreement whereby (1) StopIn.Com is given valuable advertising space on the home page of Lookhere.Com and (2) Lookhere.Com is given valuable advertising space on the home page of StopIn.Com. The main source of revenue for both StopIn.Com and Lookhere.Com is sales of advertising on their respective websites. […]
QUESTION A. Discuss uses of EPS and reasons or objectives for the current method of reporting EPS. Earnings per share are the amount of companys profit that is allocated to each outstanding share of common stock. It is an important indicator of the success or failure of a company. The formula for calculation earning per […]
QUESTION Who are the two key international players in the development of international accounting standards? Explain their role. T he two key international players in the development of international accounting standards are the IASB (International Accounting Standards Board) and the IOSCO (International Organization of Securities Commissions). The IASB is a private accounting standards-setting body which […]
QUESTION Special Delivery was started on May 1 with an investment of $45,000 cash. Following are the assets and liabilities of the company on May 31, 2012, and the revenues and expenses for the month of May, its first month of operations. Accounts receivable $6,200 Notes payable $28,000 ANSWER: CLICK REQUEST FOR AN EXPERT […]
QUESTION The following items were taken from the balance sheet of Nike, Inc. 1 Cash $2,291.10 2 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
QUESTION The following items and amounts were taken from Linus Inc.”s 2012 income statement and balance sheet. Cash $84,700 Accounts receivable 88,419 ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
