How much equity firm will have at end of next year

Assignment Help Financial Management

Reference no: EM131974965

1. To estimate Whistler Corporation's external financing needs, the chief financial officer needs to figure out how much equity the firm will have at the end of next year. At the end of the most recent fiscal year, Whistler's retained earnings were $135,500. The Controller has estimated that over the next year, gross profits will be $457,700, earnings after tax will total $525,400, and the dividend payout ratio is 30%. What are the estimated retained earnings at the end of next year? (Hint: Dividend Payments = Net Income (i.e., Earnings after taxes x dividend payout ratio.)

a. $660,900

b. $503,280

c. $293,120

d. $455,890

2. Assume Suunto Inc. has no liabilities other than the debt shown below. The tax rate is 35% and all dollars are in millions. What is Sunnto’s ROIC?

Earnings before interest and taxes: $294

Debt (at 10% interest): $840

Equity: $210

a.0.987

b. 2,275

c. 3.214

d. 0.280

e. 0.182

3. Which of the following statement is true?

a. When cash flow from financing activities on a company’s cash flow statement is negative, it means that the company is paying out more money to investors in the form of debt principal repayment, interest payments, dividends and share repurchase.

b. When cash flow from investing activities on a company’s cash flow statement is negative, it means that Company purchased more property, plant, equipment or market securities than it disposed of during the year.

c. ROIC (return on invested capital) reflects the company's fundamental earning power before it is confounded by differences in financing strategy.

d. The most common approach to developing pro forma financial statements is called the percent-of-sales method.

e. All of the above statements are true.

Reference no: EM131974965

Questions Cloud

What is the present value if the first payment : What is the present value if the first payment comes immediately?

Annual rate of return on this investment-before tax : What was his average annual rate of return on this investment, before tax?

Confidence interval for the standard deviation of the scores : Construct a 95% confidence interval for the standard deviation of the scores for students taking the test via computer.

What are the expected sales in units and dollars : The selling price per unit is expected to be $4.00. What are the expected sales, in units and dollars, for the second and third quarters of 2016

How much equity firm will have at end of next year : To estimate Whistler Corporation's external financing needs, chief financial officer needs to figure out how much equity firm will have at end of next year.

What would the debt to equity ratio have to be : A firm with a 70% debt to equity ratio and a beta of 1.46 has determined that its cost of equity is too high. In order to lower the cost of equity by 1.05%.

Estimate population mean to within five units : How large a sample size is needed to estimate population mean to within five units with 92% confidence?

Confidence interval for the proportion of wealthy people : Develop a 95% confidence interval for the proportion of wealthy people who lost 25% or more of their portfolio value over the past three years.

Demonstrate a broad understanding of business principles : To develop the skills to demonstrate a broad understanding of business principles and demonstrate depth in at least one discipline.

User Account

All Pages