QUESTION the finnce mnger spends most of his time mking mngeril finnce decisions s opposed to routine functions.DISCUSS The finance manager spends most of the time on the making managerial finance decisions such as like budgeting, working capital analysis, cost analysis and risks and uncertainty analysis, which are just opposite to the routine functions of […]
QUESTION In January 2012, Teresa Leal was named treasurer of Casa de Diseo. She decided that she could best orient herself by systematically examining each area of the companys financial operations. She began by studying the firms short-term financial activities. Casa de Diseo is located in Southern California and specializes in a furnitureline called Ligne […]
QUESTION The List Company, which can earn 7 percent on money market instruments, currently has a lockbox arrangement with a New Orleans bank for its Southern customers. The bank handles $3 million a day in return for a compensating balance of $2 million.a. The List Company has discovered that it could divide the Southern region […]
QUESTION 67 Developments International trade has expanded substantially in the last few decades; however this has led to greater uncertainty for multinational companies. Required Discuss ways in which increased globalisation may adversely affect multinational organisations. Answer Adverse effects of increased globalisation on multinational companies: Government regulation (a) Increased regulation due to greater number of industries […]
QUESTION A firm is currently employing an aggressive working capital policy with regard to the level of current assets it maintains (relatively low levels of current assets for each possible level of output). The firm has decided to switch to a more conservative working capital policy. What effect will this decision probably have on the […]
QUESTION IDX Tech is looking to expand its investment in advanced security systems. The project will be financed with equity. You are trying to assess the value of the investment, and must estimate its cost of capital. You find the following data for a publicly traded firm in the same line of business: Debt Outstanding […]
QUESTION Kidwell Industries has equity capital of $12 million, total debt of $8 million, and sales last year of $30 million.a. It has a target assets-to-sales ratio of 0.6667, a target net profit margin of 0.04, a target debt-to-equity ratio of 0.6667, and a target earnings retention rate of 0.75. In steady state, what is […]
QUESTION Suppose Autodesk stock has a beta of 2.16, whereas Costco stock has a beta of 0.69. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, what is the expected return of a portfolio that consists of 60% Autodesk stock and 40% Costco stock, according to the […]
QUESTION The long-term debt section of the balance sheet of the Queen Annes Lace Corporation appears as follows:91/4%mortgage bonds$2,500,000123/8%second mortgage bonds1,500,000101/4%debentures1,000,000141/2%subordinated debentures1,000,000$6,000,000If the average earnings before interest and taxes of the company is $1.5 million and all debt is long term, what is the overall interest coverage? Interest Expense 91/4%mortgage bonds $2,500,000 231250 (9.25 % […]
QUESTION You currently have $100,000 invested in a portfolio that has an expected return of 12% and a volatility of 8%. Suppose the risk-free rate is 5%, and there is another portfolio that has an expected return of 20% and a volatility of 12%. a. What portfolio has a higher expected return than your portfolio […]
