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The Calgary Company is attempting to establish a current assets policy. Fixed assets are $600,000, and the firm plans to maintain a 40 percent debt-to-assets ratio. Calgary has no operating current liabilities. The interest rate is 12 percent on all debt. Three alternative current asset policies are under consideration: 40, 50, and 60 percent of projected sales. The company expects to earn 18 percent before interest and taxes on sales of $6 million. Calgary's effective tax rate is 40 percent.
1. What is the expected return on equity under each alternative?
2. Evaluate ROE from owner point of view and suggest which option is best for him?
3. Suggest which option would you like if you are managers of the company and do not have much concern about business?
4. Why current assets policy is important in this particular situation?
A store sells almonds fo $6 a pound, cashews for $5 a pound, and peanuts for $2 a pound. One week the manager decides to prepare hundred sixteen ounce packages of nuts by mixing 40 pounds of peanuts with some almonds and cashews.
Compare the financial ratios with each of the preceding three (3) years (e.g. 2014 with 2013; 2013 with 2012; and 2012 with 2011). Compare the calculated financial ratios against the industry benchmarks for the industry of your assigned company.
A. Determine whether or not ABC will have a cash need during the next year. B. If the company does need cash, in which month will it need the cash? C. What is the most cash the company will need to borrow during the year (maximum amount borrowed in o..
The expected inflation rate now until the end of 2015 is 2.5% in the US, and 12% in Argentina, respectively. The current spot exchange rate between Argentina peso (AP) and the US dollar is AP8.2/$.
How much interest is to be paid in the second year of a 6-year loan of $100,000 with payments occurring at the end of each month
The Hawaiian populace was threatening an armed revolt against the American occupation.
In 2006. President George W. Bush proposed a cut in marginal income tax rates. Explain why it is difficult to predict the impact of such a tax cut upon labor.
Six months ago, you purchased 1,900 shares of ABC stock for $25.24 a share. You have received dividend payments equal to $0.40 a share. Today, you sold all of your shares for $27.52 a share. What is your total dollar return on this investment?
Which of the following best defines incremental earnings?
Assume a large healthcare system has just approved a $355,000 annual (per year) bonus to retain its top cardiac surgeon.
1) You are given the following information regarding the rate of return of the stock for Gringots
Explain the time value of money and why businesses or individuals, may both, wish to delay receiving cash flows or receive cash flows earlier.
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