Interest expense for Rhodes Manufacturing was $500,000 in 2018. During 2018, $3.7 million in old debt was repaid and $1.6 million was raised through new borrowing. Dividends of $460,000 were paid and $1.7 million was raised through new share sales. a. Calculate the cash flow to bondholders. Treat interest as a financing flow. (Enter answers in dollar, not in millions of dollar. Use minus sign to enter cash or financing outflows, if any.) Cash flow to bondholders
Financial Ratios
A Ratio refers to a figure calculated as a reference to the relationship of two or more numbers and can be expressed as a fraction, proportion, percentage, or the number of times. When the number is determined by taking two accounting numbers derived from the financial statements, it is termed as the accounting ratio.
Return on Equity
The Return on Equity (RoE) is a measure of the profitability of a business concerning the funds by its stockholders/shareholders. ROE is a metric used generally to determine how well the company utilizes its funds provided by the equity shareholders.
Cash flows to bond holders will be interest paid, debt repaid and new debt raised.
Cash flows to bondholders = Interest Expenses + Old debt repaid - New borrowing
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