1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000000 TL and its net profit is 300 000 TL.a) Find the profit margin, ROA and ROE of that firm.b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; willyou suggest to buy the shares of that firm in the stock market? Why or why not?2) a) The following information is given. The expected rate of return of the index in next year is 30%, current annual rate ofreturn of T-Bills is %15. We consider a stock whose beta is 1.2. It is estimated that this firm will pay a dividend per share of 2 TLnext year. Investors predict that dividends will grow at the constant rate of 15% in future years. Then what may be thefundamental price of that stock?b) Will you consider to buy that stock if its current market value is 12.4 TL pershare?3) In the problem above (question 2); let us assume that investors rather than predicting one growh rate of 15% ; predict twodifferent growh rates. It is estimated that the dividends will grow at the rate of 10% in the next three years. Then the growth rateof dividends will accelerate to 20% starting in the fourth year and that growth rate will continue forever in the rest of future years.Given this; how the fundamental price of that stock changes ? (use the values of Question 2 in the answer. Only the growth rateis different in this question)b) Is that stock a good buy at the price of 12.4 per share with that new fundamental price?2/24) We know that stock A exactly increases 14% when index is up by 10% and declines also 14% when index declines by 10%.Can we find the expected return of that stock if we know that the expected return of the index is 50% and the annual rate ofreturn of T-Bills is 12%?

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1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000 000 TL and its net profit is 300 000 TL. a) Find the profit margin, ROA and ROE of that firm. b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; will you suggest to buy the shares of that firm in the stock market? Why or why not?

1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000 000 TL and its net profit is 300 000 TL. a) Find the profit margin, ROA and ROE of that firm. b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; will you suggest to buy the shares of that firm in the stock market? Why or why not?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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