Calculate the average ROCE for each company.Return on Capital Employed 20162017201820192020BHP10.19%12.03%17.24%19.63%17.65%RIO9.63%15.36%15.96%20.46%20.43%FMG11.34%20.40%11.28%28.28%33.55%

Ratio analysis means where different ratio of various years of years companies has been compared and…

Answered: alculate the average ROCE for each…

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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K Calculation of individual costs and WACC Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 35% long-term debt, 15% preferred stock, and 50% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 29%. Debt The firm can sell for $1025 a 12-year, $1,000-par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2.5% of the par value is required. Preferred stock 9.00% (annual dividend) preferred stock having a par value of $100 can be sold for $96. An additional fee of $5 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $60 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.70 ten years ago to the $4.40 dividend payment, Do, that the company just recently…
What do these numbers say about the company?
1. Calculate the expected return for the following six returns for thetwo companies below: Company A Company B10% 13%17% 23%-9% 3%21% 15%11% 18%19% -10%
Debt Ratio Equity Ratio EPS DPS Stock Price 30% 70% 1.55 0.34 22.35 40% 60% 1.67 0.45 24.56 50% 50% 1.72 0.51 25.78 60% 40% 1.78 0.57 27.75 70% 30% 1.84 0.62 26.42 Which capital structure shown in the preceding table is Universal Exports Inc.’s optimal capital structure? Globex Corp. has a capital structure that consists of 40% debt and 60% equity. The firm’s current beta is 1.10, but management wants to understand Globex Corp.’s market risk without the effect of leverage. If Globex Corp. has a 25% tax rate, what is its unlevered beta?
Estimating Share Value Using the DCF Model Following are forecasted sales, NOPAT, and NOA for Texas Roadhouse for 2016 through 2019. a. Forecast the terminal period values assuming a 1% terminal period growth rate for all three model inputs: Sales, NOPAT, and NOA. Round your answers to the nearest dollar. Reported Forecast Horizon Terminal $ thousands 2015 2016 2017 2018 2019 Period Sales $1,807,368 $2,078,473 $2,390,244 $2,581,464 $2,787,981 Answer NOPAT 102,495 170,435 196,000 211,680 228,614 Answer NOA 662,502 761,904 876,189 946,284 1,021,987 Answer b. Estimate the value of a share of TXRH common stock using the discounted cash flow (DCF) model as of December 29, 2015; assume a discount rate (WACC) of 7%, common shares outstanding of 70,091 thousand, net nonoperating obligations (NNO) of $(14,680) thousand, and noncontrolling interest (NCI) from the balance sheet of $7,520 thousand. Note that NNO is negative because the company’s cash exceeds its…
TABLE 7.7 Financlal projoctions for Prairie Home Stores, 2016-2021 (figures in millions) 2016 2017 2018 2019 2020 2021 Rapid-Growth Scenario Book valuo, start of year S80 $ 92 $105.8 $121.7 $139.9 $146.9 Earnings 12 13.8 15.9 18.3 21.0 22.0 14 14.7 Dividonds 12 13.8 15.9 18.3 7.0 7.4 Rotainod earnings Book value, and of yoar 92 105.8 121.7 139.9 146.9 154.3 Constant-Growth Scenario Book value, start of year $80 $84 $88.2 $92.6 $ 97.2 $102.1 Earnings 12 12.6 13.2 13.9 14.6 15.3 Dividonds 8. 8.4 8.8 9.3 9.7 10.2 Rotainod earnings 4 4.2 4.4 4.6 4.9 5.1 Book value, end of year 84 88.2 92.6 97.2 102.1 107.2 Notos: 1 Both panels assumo oarnings oqual to 15% of start-of-yoar book valuo. This proftability rato is constant. 2 Tho top panol assumos afl carnings aro reinvosted from 2016 to 2019. In 2020 and lator yoars, two-thirds of oarnings aro paid out as dividends and one-third roinvosted. 3. Tho botlom panel assumos two-thirds of oarnings aro paid out as dividends in all yoars. 4. Columna…
Calculation of individual costs and WACC: Dillon Labs has asked its financial manager to measure the cost of each specific type of capital as well as the weighted average cost of capital. The weighted average cost is to be measured by using the following weights: 35% long-term debt, 10% preferred stock, and 55% common stock equity (retained earnings, new common stock, or both). The firm's tax rate is 28%. debt The firm can sell for $1010 a 14-year, $1,000-par-value bond paying annual interest at a 7.00% coupon rate. A flotation cost of 2.5% of the par value is required. Preferred stock 7.00% (annual dividend) preferred stock having a par value of $100 can be sold for $88. An additional fee of$4 per share must be paid to the underwriters. Common stock The firm's common stock is currently selling for $70 per share. The stock has paid a dividend that has gradually increased for many years, rising from $2.25 ten years ago to the $3.67 dividendpayment, D0, that…
Which of the following is not true? Firm A Firm B Industry Benchmark 2018 2019 2020 2018 2019 2020 2018 2019 2020 ROA 9.14% 9.50% 9.90% 8.11% 8.16% 8.19% 8.11% 8.14% 8.15% ROE 22.45% 22.95% 23.45% 19.65% 19.88% 20.12% 19.95% 20.55% 21.00% TIE 1.75 1.65 1.55 2.75 2.90 3.05 2.25 2.30 2.50 CR 3.25 3.66 3.75 2.55 2.65 2.75 2.40 1.45 2.50 EPS 1.90 2.10 2.25 1.55 1.65 1.75 1.52 1.55 1.60 A Based on ROA, Firm A is doing better than Firm B and the Industry benchmark. B Based on Times Interest Earned, Firm A is doing better than Firm B and the Industry benchmark. C Based on ROE, Firm A is doing better than Firm B and the Industry benchmark. D Based on current ratio, Firm B is doing better than the Industry benchmark.
Year Revenue Fixed costs Variable costs 0 1 1000.00 150.00 200.00 Add. investment in NWC 10.00 Add. investment in operating long-term 70.00 assets Depreciation 60.00 Interest expenses 35.00 Newly issued debt 25.00 Principle repayments 15.00 Market value of the firm: Short-term debt Long-term debt Price per share No. of shares Market value 200.00 600.00 18.00 100 1,800.00 2,600.00 Common stock Total Cost of equity (Rs) Tax rate 0.1400 0.40 Growth rate per year from year 1 through 0.12 year 5 Growth rate after year 5 0.05 Based on the above information, what is the stock price per share based on the equity free cash flow model? Select one: O a. 36.46 O b. 40.33 O c. 44.47 O d. 32.53

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*Return on Capital Employed*
	2016	2017	2018	2019	2020
BHP	10.19%	12.03%	17.24%	19.63%	17.65%
RIO	9.63%	15.36%	15.96%	20.46%	20.43%
FMG	11.34%	20.40%	11.28%	28.28%	33.55%

alculate the average ROCE for each company. Return on Capital Employed 2016 2017 2018 2019 2020 BHP 10.19% 12.03% 17.24% 19.63% 17.65% RIO 9.63% 15.36% 15.96% 20.46% 20.43% FMG 11.34% 20.40% 11.28% 28.28% 33.55%