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Questions -
Q1. Caltrate Company follows a moderate current asset investment policy, but it is now considering a change, perhaps to a restricted or maybe to a relaxed policy. The firm's annual sales are $400,000; its fixed assets are $100,000; its target capital structure calls for 50% debt and 50% equity; its EBIT is $35,000; the interest rate on its debt is 10%; and its tax rate is 40%. With a restricted policy, current assets will be 15% of sales, while under a relaxed policy they will be 25% of sales. What is the difference in the projected ROEs between the restricted and relaxed policies?
Q2. TNT Company is evaluating the extension of credit to a new group of customers. Although these customers will provide $240,000 in additional credit sales, 12% are likely to be uncollectible. The company will also incur $21,000 in additional collection expense. Production and marketing costs represent 72% of sales. The firm is in a 30% tax bracket and has a receivables turnover of six times. No other asset buildup will be required to service the new customers. The firm has a 10% desired return on investment.
a. Should TNT Company extend credit to these customers?
b. Should credit be extended if the receivables turnover drops to 1.5 and all other factors are the same?
What is the ratios for both adidas and nike companies for five years 2014 - 2017. Debt utilization ratios (except fixed charge coverage)
How the government and central bank could alleviate the current recession with fiscal and monetary policy. Are there any potential problems with such policies?
Companies A and B purchased identical equipment having an estimated service life of 10 years. Company A uses double-declining balance method, and Company B uses the straight-line method. Assuming the companies are identical in all other respects, whi..
Discuss how would account for the depreciation of the building and how the replacement of the roof would affect the depreciation calculations.
Francine is the VP of Rockledge INC. As a company officer, she has authority to sign checks for Rockledge. One day, Francine makes out a check drawn from Rockledges account and payable to Beluah Majors, a made-up name.
Find What would be the bonds value? Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent.
If the bond has 10 years to maturity how much should the pension fund be willing to pay for the bond if it aims to earn a yield to maturity of 6.0%?
Dividends on Preferred and Common Stock, Determine the total dividends and the per-share dividends declared on each class of stock for each of the six years.
Jesper Parnevik borrowed $91,230 on March 1, 2012. This amount plus accrued interest at 12% compounded semiannually is to be repaid March 1, 2022. To retire this debt, Jesper Parnevik plans to contribute to a debt retirement fund five equal amounts s..
Determine Direct materials efficiency (usage) variance and Direct materials joint price-quantity variance (defined as: (AP-SP) x (AQ-SQ)).
Country Store, Inc. provides credit to their favorite customers. What is the desired balance in the "Allowance for Doubtful Accounts" On December 31, 2018?
Refer to the data for the Collins Group. Which of the following is the best estimate for the weight of debt for use in calculating the firm's WACC?
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