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Explain the advantages and disadvantages of stretching payments on trade credit.
What do you need to consider in determining OEA's cost of the line of credit?
If there is no stated interest on trade credit, how can there be a cost to trade credit as a source of short-term financing?
Calculate the effective annual cost of trade credit for the terms of 1/ 10, net 40.
Describe SunTrek's dividend policy in terms of dividends per share and dividend payout. Provide graphs to illustrate SunTrek's policy.
Firm B performs all the credit functions, saving Cash Poor an estimated $10,000 over the next month.
Why is inventory removed from assets available to cover current liabilities in the calculation of the quick ratio?
The Dieu Company had sales of $1 million in 1996, with 60% of its sales made on credit. If the average accounts payable are $100,000.
If the factor charges an up-front fee of 2%, what is the effective annual cost of this loan?
What is the effective cost of financing for a six-month inventory field warehouse loan of $100,000 that requires interest of $6,000 .
The field warehouse requires a once-ayear payment of $10,000, paid at the beginning of the year, no matter how much the firm borrows.
If Armour borrows $2 million for one month with this field warehousing loan, what is the cost of financing for one month?
Bank loan with single payment interest of 2% for three months, with a compensating balance of 10%
What is the advantage of using a repurchase agreement rather than borrowing from a bank?
What is the price that the commercial bank will sell the bond for to the lender in the repurchase agreement?
Comment on the liquidity of the two firms. Which firm has more risk of not satisfying its near-term obligations? Why?
Explain why a high turnover may be seen as favorable information about the management of the firm.
Suppose you must select ratios to evaluate the returns on assets of a manufacturing firm. Which ratios would you select? Why?
Suppose you must select ratios to evaluate the returns on assets of an airline. Which ratios would you select? Why?
Suppose a company has a return on equity of 20%. If this company has an asset turnover of 4 times and a profit margin of 5%, what is its debt-to-assets ratio?
The dividend payout ratio for the Albany Company is 40%. Albany has 1 million shares outstanding, sales of $15 million, and a net profit margin of 5%.
Explain why a corporation would issue preferred stock rather than a debt security or common shares.
What was the reason for the popularity of auction and remarketed preferred stock?
Calculate the total amount of dividends that Manny-Hanny must pay each year and the annual amount of dividends per share.
If each preferred share is convertible into 40 common shares, what is the conversion value of your 1,000 preferred shares .