QUESTION What method of depreciation would you prefer, MACRS or straight-line, if your objective is to maximize the present value of your firms cash flows? n equal amount of depreciation is charged in all the years during the life of the asset. Thus, when the amount of depreciation is added back to the profits after […]
QUESTION Days Sales in Receivables a company has net income of $195,000, a profit margin of 9.40 percent, and an accounts receivable balance of $106,851. Assuming 75 percent of sales are on credit, what are the companys days sales in receivables? Concept: Days sales in receivables of company show the number of days taken by […]
QUESTION What is the rationale behind the NPV method? According to NPV, which project(s) should be accepted if they are independent? Mutually exclusive? erms of dollars. NPV method assumes that the reinvestment rate of return to be equal to the cost of capital. According to NPV method while evaluating the independent projects a project can […]
QUESTION Common-size analysis is used in financial analysis toa. Evaluate changes in a companys operating cycle over time.b. Predict changes in a companys capital structure using regression analysis.c. Compare companies of different sizes or compare a company with itself over time.d. Restate each element in a companys financial statement as a proportion of the similar […]
QUESTION What is the likely effect of inflation on the level of capital expenditures made by private firms? What must the financial manager do to ensure that a firms capital budgeting procedures will be effective in an inflationary environment? Answer: Inflation indicates general trend of rise in price of commodities in the market which led […]
QUESTION You might expect the price of a mature firms stock to decline if it announces a stock offering. Would you expect the same reaction if the issuing firm were a young, rapidly growing company? e possible to be financed by the retained earnings. The young and rapidly growing company requires finance to finance the […]
QUESTION What is measured by the internal rate of return? When is a project considered acceptable using this method? return than in such case project must not be accepted. ws fro5 eiE Y activities such as investment in fixed assets, investment in stock market, bonds etc. The sale proceeds of these assets are also included […]
QUESTION Why do public utilities typically have capital structures with about 50 percent debt, whereas major oil companies average about 25 percent debt in their capital structures? ich the financial institutions are more willing to extend loans to public utilities. On the other hand the oil companies re considered to be risky as there performance […]
QUESTION STOCKHOLDERS EQUITY RELATIONSHIPS Data from the financial statements of four different companies are presented in separate columns in the table below. Each column has one or more data items missing. (a) Total Equity = Common Stock add Retained Earnings Total Equity = $ 50,000 add $ 12,100 = $ 62,100 (b) Retained Earnings= Retained […]
QUESTION What other ?oexternal?? factors limit a firms ability to pay cash dividends? dend. 1) Tax laws affecting the amount of¦ ANSWER: CLICK REQUEST FOR AN EXPERT SOLUTION
