Funding and liquidity difficulties for ferris industries

Assignment Help Financial Management
Reference no: EM131842944

Suppose Ferris Industries shows the following assets on their balance sheet:

Accounts Receivable = $5 million

Inventory = $5 million

Plant & Equipment = $140 million

Which of following capital structures is MOST likely to lead to funding and liquidity difficulties for Ferris Industries?

Payables = $3 million Current Debt = $7 million Long Term Debt = $60 million Common Equity = $80 million

Payables = $5 million Current Debt = $5 million Long Term Debt = $100 million Common Equity = $40 million

Payables = $13 million Current Debt = $27 million Long Term Debt = $20 million Common Equity = $90 million

Long Term Debt = $80 million Common Equity = $70 million

Reference no: EM131842944

Questions Cloud

Describes the impact of globalization on us business : Describes the impact of globalization on U.S. businesses. In your analysis, please include information about the impact of at least four economic drivers.
Draw a gluing diagram of the connected sum of two tori : Draw a gluing diagram of the connected sum of two tori. More generally, show that the curve given by the equation y2 = x3 + ax2 + bx
Formulation of the categorical imperative command : What does the second formulation of the categorical imperative command?
Review problem on poverty simulation : Following participating in poverty simulation is given in document, write a paper that describes your feelings as you participated in this exercise.
Funding and liquidity difficulties for ferris industries : Which of following capital structures is MOST likely to lead to funding and liquidity difficulties for Ferris Industries?
Why might utilitarianism offend our sense of justice : Why might utilitarianism offend our sense of justice? Give example(s). What would a defender of utilitarianism respond to the justice objection?
What is the duration of bond : You have discovered that when the required rate of return on a bond you own fell by 0.5 percent from 9.5 percent to 9 percent, What is the duration of this bond
Evaluate the two evaluation instruments used in case : List and describe additional training modules that could be developed based on the training objectives that were developed in the design phase of Fabrics, Inc.
What period of reconstruction is the author writing about : What is the topic of each excerpt? What period of Reconstruction is the author writing about? What groups are examined in American society?

Reviews

Write a Review

Financial Management Questions & Answers

  Loan them the full amount they need

Imagine you are a bank and ABC is asking you to for a loan to purchase the inventory they ned for their expected sales Christmas Sales. What financial ratios (give at least two) would you use to make your decision? Explain why you chose each rat..

  What is the dollar amount of taxes paid

Energizer Battery Manufacturers had sales of $2,000,000 in 2010 and their cost of goods sold represented 75 percent of sales. Selling and administrative expenses were 10 percent of sales. Depreciation expense was $100,000 and interest expense for the..

  Determine the playback and irr-npv

A college student spends $12,000 (end of the year) in year 1, 15,000 in year 2, 16,000 in year 3, and 18,000 in year 4 in order to acquire a college degree. The increase in potential salary (compared to a high school graduate) is expected to be 500 a..

  What is estimate of appropriate stock price-price–sale ratio

TwitterMe, Inc., is a new company and currently has negative earnings. The company’s sales are $1.5 million and there are 120,000 shares outstanding. If the benchmark price–sales ratio is 4, what is your estimate of an appropriate stock price. What i..

  Current stock price and the same standard deviation

Two stocks (Stock J and Stock K) have the same current stock price, and the same standard deviation. There exists a call option on 100 shares of Stock J, a call option on 100 shares of Stock K, and a call option on a portfolio of 50 shares of J and 5..

  What is after-tax operating cash flow

what is the after-tax operating cash flow that they should use for Year 3 of this project?

  Firm needs to plow back its earnings to fuel growth

No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth.

  Amortized using straight-line schedule

Daniel Kaffe, CFA of Kendrick Enterprises, is evaluating a 10-year, 8 percent loan with gross proceeds of $5,850,000. The interest payments on the loan will be made annually. Flotation costs are estimated to be 2.5 percent of gross proceeds and will ..

  What are the relevant cash flows

Healthy Potions, Inc., a pharmaceutical company, bought a machine at a cost of $2 million five years ago that produces pain-reliever medicine. The machine has been depreciated over the past five years, and the current book value is $700,000. The comp..

  The firm will be unable to pay any cash dividends

If a firm’s CFFA or “free cash flow” is negative, this means that the firm will be unable to pay any cash dividends.

  Income stream of payments

Travis is offered the following income stream of payments: $10,000 in one year, $20,000 in two years, and 50,000 in five years. How much should Travis be willing to pay for this income stream if his opportunity cost of capital is 6.5%?

  What is the value of gillette stock if firm cost of stock

What is the value of Gillette's stock if the firm's cost of stock is 8%? $15.07.

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