Smith Motors Inc. manufactures, distributes, and services automotive parts and engines worldwide. Smith’s income statement for the year just ending is shown below. What was Smith’s dividend per share in Year 1? Smith Motors Inc. Income Statement Year 1 ($000,000’s) Revenue $19,115 COGS 14,255 SG&A 2,245 Dep. Exp. 344 EBIT 2,271 Int. Exp. 47 Pre-Tax […]
CN is North America’s fifth largest railroad. CN is forecasting its financial statements for Year 7. Selected financial information for Year 6 is provided in the table. What is long term debt (the plug variable) for the forecasted year? To forecast current liabilities payable use the percentage of sales method based on Year 6 figures. […]
Slate Rock and Gravel Co. sets its dividend using the target payout ratio policy. Selected financial data for Slate is available in the table below. What dividend should Slate Rock and Gravel offer for the coming year (Year 2 ) if it uses an adjustment factor of 1.0? Selected Financial Information Slate Rock and Gravel […]
Which of the following are agency costs? I. Forgoing an investment opportunity which would add to the market value of the owner’s equity II. Paying a dividend to each of the existing shareholders III. Purchasing new equipment which increases the value of each share of stock IV. Hiring outside auditors to verify the accuracy of […]
Polaris Industries is forecasting its financial statements for Year 6. Selected financial information for Year 5 is provided in the table. What is Retained Earnings for Year 6? Selected Financial Information Polaris Industries Inc. ($000s) Year 5 Ratios (to Sales) Forecast Year 6 Revenue $1,908,459 $1,803,494 COGS 1,454,374 0.762067 SG&A 213,114 0.111668 Dep. Exp. 28,632 […]
Ripper Filtration Inc. designs domestic water filters that remove fluoride. Selected financial data is provided in the table below. Ripper is trying to set the dividend for the Year 2 using the target payout model. Selected Financial Information Ripper Filtration Inc. Dividend per share (Year 1 ) $0.55 Target payout ratio 20% Earnings per share […]
Agency costs pose the biggest problem for A) insiders. B) shareholders. C) directors. D) agents. E) executives. ANSWER B
Frank Castanza owns 100 shares in a weapons company called Guns-R-Us. Frank brags about its steady, annual dividend of $1.25 per share. You are jealous of the dividend but philosophically opposed to weapons companies, so you can’t buy the stock. Instead, you have identified the Paper Street Soap Factory (PSSF) which is developing a new […]
Which of the following is the largest cost associated with bankruptcy? A) Managerial time and resources devoted to the bankruptcy proceedings B) Legal expenses C) The loss of key customers and employees D) Bankruptcy court fees E) Banking fines ANSWER C
Morty Seinfeld owns 100 shares in a tobacco company called Tarbox. Morty brags about its steady, annual dividend of $1.25 per share. You are jealous of the dividend but philosophically opposed to “sin” companies, so you can’t buy the stock. Instead, you have identified the Paper Street Soap Factory (PSSF) which is developing a new […]
