A firm with highly unpredictable sales revenue would best choose ________ funding strategy to minimize risk. A) the aggressive B) the conservative C) the trade-off D) a seasonal ANSWER B
Date: September 19th, 2020
Tangshan Mining Company must choose its optimal capital structure. Currently, the firm has a 40 percent debt ratio and the firm expects to generate a dividend next year of $4.89 per share and dividends are expected to grow at a constant rate of 5 percent for the foreseeable future. Stockholders currently require a 10.89 percent […]
Date: September 19th, 2020
A pro forma statement uses the prior year’s financial statements to find the relationship or relative percentage of each line (accounting category) to either the sales revenue or the total assets of the firm. Indicate whether the statement is true or false. ANSWER Answer: TRUE
Date: September 19th, 2020
Joe Ogden, the Chairman and CEO of Ogdenergy, Inc, a promising venture in the natural gas industry, is negotiating with Summer Street Capital Partners, a Buffalo, NY-based venture capital firm (VC), for funding of $15 mn. , which will be used for building PP&E. Summer Street is impressed with the venture, and is considering providing […]
Date: September 19th, 2020
A firm has a current capital structure consisting of $400,000 of 12 percent annual interest debt and 50,000 shares of common stock. The firm’s tax rate is 40 percent on ordinary income. If the EBIT is expected to be $200,000, the firm’s earnings per share will be ________. A) $2.40 B) $3.04 C) $7.04 D) […]
Date: September 19th, 2020
A firm has an average age of inventory of 20 days, an average collection period of 30 days, and an average payment period of 60 days. The firm’s cash conversion cycle is ________ days. A) 70 B) 50 C) -10 D) 110 ANSWER C
Date: September 19th, 2020
Pro forma statements are tools used by the company to monitor its profitability and obligations for the previous and/or current year. Indicate whether the statement is true or false. ANSWER Answer: FALSE Explanation: Pro forma statements are tools used by the company to forecast its profitability and obligations for the coming year.
Date: September 19th, 2020
Name three things that a pro forma income statement can tell us. What will be an ideal response? ANSWER Answer: For every sales dollar, it tells us the following three things: the percentage of the cost of goods sold, the percentage of profit, and the percentage paid out in dividends. For example, consider […]
Date: September 19th, 2020
What does a pro forma statement do? On what inputs does a pro forma statement rely? What will be an ideal response? ANSWER Answer: A pro forma statement sets out the financial predictions of a company on an “as if” basis–that is, it projects future performance based on a set of operating and […]
Date: September 19th, 2020
Which of the following is the least likely source of funding for a venture that is in the seed stage of development? a. angel financiers b. bootstrapping c. banks ANSWER C
Date: September 19th, 2020
