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How does the firm's required rate of return on investment enter into inventory decisions?
What additional information does the fixed asset turnover ratio provide over the total asset turnover ratio? For which industries does it carry greater significance?
Vigo Vacations has an equity multiplier of 2.5. The company's assets are financed with some combination of long-term debt and common equity. What is the company's debt ratio?
How does the deductibility of interest and dividends by the paying corporation affect the choice of financing (that is, the use of debt versus equity)?
How does a firm's required rate of return on investment enter into the analysis of changes in its credit and collection policies?
How do ordering costs for items purchased externally differ from ordering costs for items manufactured internally within the firm?
How can you increase the Sharpe ratio of a portfolio? What type of stocks would you have to add to it in order to do so?
How can the adherence to high standards of ethical business practice contribute to the goal of shareholder wealth maximization?
How can the acquisition of additional information be an effective tool of risk management? Give an original example of the use of this technique.
Give two reasons stockholders might be indifferent between owning the stock of a firm with volatile cash flows and that of a firm with stable cash flows.
Give some examples that illustrate how Different growth rates might distort a comparative ratio analysis. How might these problems be alleviated?
Give some examples of agency costs incurred by shareholders in the agency relationship between the shareholders (owners) and management of a firm.
Firm A wants to acquire Firm B. Firm B's management agrees that the merger is a good idea. Might a tender offer be used?
Explain why management may tend to pursue goals other than shareholder wealth maximization.
Explain whether the following statement is true or false: $100 a year for 10 years is an annuity; but $100 in Year 1, $200 in Year 2, and $400 in Years 3 through 10 does not constitute an annuity.
Explain the trade-offs involved in determining the number of collection centers that a firm should use.
Explain the differences in the responsibilities of the treasurer and the controller in a large corporation.
Explain the differences among the following terms related to financial failure: Technical insolvency. Legal insolvency.
Explain the difference between spontaneous and negotiated sources of short-term credit.
Evaluate the following statement: Issuing convertible securities represents a means by which a firm can sell common stock at a price above the existing market?
If Edney's sales increase 30%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio?
Doublewide Dealers has an ROA of 10%, a 2% profit margin, and an ROE of 15%. What is its total assets turnover? What is its equity multiplier?
Does interest rate parity imply that interest rates are the same in all countries?
Distinguish between beta (or market) risk, within-firm (or corporate) risk, and stand-alone risk for a potential project. Of the three measures, which is theoretically the most relevant, and why?
Discuss the probability versus risk trade-offs associated with alternative levels of working capital investment.