Calculate the debt-to-equity

Assignment Help Financial Management
Reference no: EM131959496

You are considering a stock investment in one of two firms (LotsofDebt, Inc. and LotsofEquity, Inc.), both of which operate in the same industry. LotsofDebt, Inc. finances its $34.00 million in assets with $31.00 million in debt and $3.00 million in equity. LotsofEquity, Inc. finances its $34.00 million in assets with $3.00 million in debt and $31.00 million in equity. Calculate the debt ratio. (Round your answers to 2 decimal places.) Calculate the equity multiplier. (Round your answers to 2 decimal places.) Calculate the debt-to-equity. (Round your answers to 2 decimal places.)

 

Reference no: EM131959496

Questions Cloud

Characteristic of well-functioning secondary market : Which of following is NOT a characteristic of a well-functioning secondary market?
What is cypress net working capital : Balance Sheet You are evaluating the balance sheet for Cypress Corporation. What is Cypress's net working capital?
What is the current price of gaelic airlines bonds : These bonds carry a coupon rate of 7% with coupons paid semi-annually. What is the current price of Gaelic Airlines bonds?
Calculations on the cash conversion cycle : You have made some calculations on the cash conversion cycle -- so you are a little comfortable with that process.
Calculate the debt-to-equity : Calculate the debt ratio. Calculate the debt-to-equity.
What is degree of combined leverage : If you combine Boswell’s capital structure with Sinclair’s operating plan, what is the degree of combined leverage?
What is the year-end balance in retained earnings : What is the year-end 2018 balance in retained earnings for Mr. Husker’s Tuxedos?
Calculate the earnings per share : The firm has no preferred stock outstanding and 100,000 shares of common stock outstanding. Calculate the 2018 earnings per share.
Calculate its basic earning power and return on equity : Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC).

Reviews

Write a Review

Financial Management Questions & Answers

  Central role in international business-financial contracts

Why has LIBOR played such a central role in international business and financial contracts?

  To calculate the cost of new common stock

To calculate the cost of new common stock, we must adjust the Dividend Growth Model equation for floatation costs of the new common shares.

  Discount rate be before you would reject the project

A new computer system will require an initial outlay of $17,000, but it will increase the firm’s cash flows by $3,400 a year for each of the next 7 years. Calculate the NPV and decide if the system is worth installing if the required rate of return i..

  What is yield-to-maturity of debt and expectded return

Gladstone Corporation is about to launch a new product. Depending on the success of the new product, Gladstone may have one of four values next year: $150 million, $135 million, $95 million, or $80 million. What is the initial value of Gladstone’s eq..

  Calculate the amount of the firms income before tax

Banana Box Corporation has sales of $4004557; income tax of $430395; selling, general, and administrative expenses of $216999; depreciation of $337383; cost of goods sold of $2673891; and interest expense of $167118. Calculate the amount of the firm'..

  Recall the mechanism behind continuous compounding

Recall the mechanism behind continuous compounding: the whole period is divided into increasing numbers of smaller and smaller sub-periods, and the resulting effective rate is calculated as a limit of the effective rates under increasing number of su..

  Maturity of repriced option will equal remaining maturity

Patriot Corp. compensates executives with 10-year European call options which is granted at-the-money. If there is a signi?cant drop in the share price, the company’s board will reset the strike price of the options to equal the new share price. Then..

  Assume the lender imposes prepayment penalty

Assume the lender imposes a prepayment penalty of 1 percent of the outstanding loan balance if the loan is repaid within the first eight years

  Why is risk profiling important evaluate

Identify and explain recent regulatory changes and/or controls imposed upon the provision of financial advice. Why is risk profiling important? Evaluate

  In rising interest rate environment

In a rising interest rate environment, how would bond values change over time? As a bond investor, what measures would you take to manage rate risk?

  Calculate net present value-modified internal rate of return

An expansion project being considered by your firm has an initial cost of $1,250,000 and expected net cash flows of $270,000 per year for the first 3 years, and $380,000 per year for the next three years. Calculate the Net Present Value (NPV), the Mo..

  What is the percent market value of debt for this firm

The current stock price for a company is $47 per share, and there are 7 million shares outstanding. what is the percent market value of debt for this firm?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd