Dividend Policy

Here are several assertions about typical corporate dividend policies. Which of them are true? Write out a corrected version of any false statements. a. Most companies set a target dividend payout ratio. b. They set each year's dividend equal to the target payout ratio times that year's earnings. c. Managers and investors s ...continues

Dividend Policy II

For each of the following four groups of companies, state whether you would expect them to distribute a relatively high or low proportion of current earnings and whether you would expect them to have a relatively high or low price-earnings ratio. a. High-risk companies. b. Companies that have recently experienced a temporary ...continues

WACC

1) Why is WACC important to an organization? 2) What impact does WACC have on capital budgeting and structure?

Plank's Plants : Sustainable Growth Rate

17. Plank's Plants had net income of $2,000 on sales of $50,000 last year. The firm paid a dividend of $500. Total assets were $100,000, of which $40,000 was financed by debt. a. What is the firm's sustainable growth rate? b. If the firm grows at its sustainable growth rate, how much debt will be issued next year? c. W ...continues

Components of master budget

Describe how the master budget and its components are developed for a manufacturing firm

Internal Growth

Go Go Industries is growing at 30 percent per year. It is all-equity financed and has total assets of $1 million. Its return on equity is 25 percent. Its plowback ratio is 40 percent. a. What is the internal growth rate? b. What is the firm's need for external financing this year? c. By how much would the firm increase its ...continues

Common types of receivables

What are some common types of receivables other than accounts receivable and notes receivable?

Problems

10. An article recently appeared in the Wall Street Journal indicating that companies are selling their receivables at a record rate. Why are companies selling their receivables? 29. How is a gain or loss on the sale of a plant asset computed? 34. What are natural resources, and what is their distinguishing characteri ...continues

Required rate of return on stock; parties (principal, agent) to the transaction in the purchase of assets; price of stock

1. A stock that pays a constant dividend of $1.5 forever currently sells for $10.71. What is the required rate of return? A.10% B.12% C.13% D.14% E.15% ------------- 2. X hires Y investment bank to negotiate the purchase of the fiber optic assets of Z. Identify the parties to this transaction: A. Y is the principal and ...continues

Debt Equity Ratio

If the profit margin is 12 percent, total asset turnover is 1.35 and ROE is 17.20 percent than what is the debt equity ratio?