Sam Holdings is planning to open a new wholesaling operation. The target operating profit margin is 25%. The unit contribution margin will be 40% of sales. Average annual sales are forecast to be $4,250,000. The firm's total asset is $8,750,000 with debt-asset ratio of 40%. The firm pays 12% interest on the debt and has 100,000 common stocks. The firm is subjected to corporate tax rate of 28%. d. What is the degree of combined/total leverage (DCL/DTL)?

Q: The Paulson Company’s year-end balance sheet is shown below. Its cost of commonequity is 14%, its…

A: cost of common equity = 14.00% before tax cost of debt = 10% Tax rate = 40% Total debt = $1167…

Q: The Anderson Corporation (an all-equity-financed firm) has a sales level of $300,000 with a 12…

A: Rate of return is the annual income earned in proportion to original investment.

Q: Tartan Industries currently has total capital equal to $10 million, has zero debt, is in the 25%…

A: Here, Total Capital is $10,000,000 Tax rate is 25% Net Income is $ 4,000,000 Dividend Pay-out Ratio…

Q: What is the EVA for Smith Falls? A)$305,000 B)$338,563 C)$220,188 D)$275,500 E)$255,500

A: EVA = NOPAT- WACC ( Total Assets - Current Liabilities ) WACC = ( Weight of Equity x Cost of Equity…

Q: A corporation plans to buy out a supplier and needs $2 million in new capital to do so. The…

A: Cost of debt and cost of equity are two components of a company's capital structure which represent…

Q: if

A: Is the composited cost of capital, considering the weight of all long-term finance of the company…

Q: manufactures and sells personal computers is an all- equity firm with 100,000 shares outstanding,…

A: In order to calculate the earning per share you considered the total number of outstanding share in…

Q: Bolero Corporation has one long term loan (interest bearing debt) of $700,000 at an interest rate of…

A: Given: Particulars Amount Rate Debt $700,000 5.20% Equity $1,000,000 16.00%

Q: The tax rate applicable to Blue Co. is 20%. The firm pays 5% interest on the P350,000 outstanding…

A: Outstanding loan = P 350000 Interest rate = 5% Tax rate = 20% Preferred dividends = P 16500

Q: Consider a firm with an EBITDA of $1,100,000 and an EBIT of $1,000,000. The firm finances its assets…

A: EPS or Earnings per share is the per share returns in dollar terms which can be determined after…

Q: Longhorn, Incorporated, has produced rodeo supplies for over 20 years. The company currently has a…

A: The adjusted present worth can be computed by considering all the cash outflow that an investor will…

Q: New Business is just being formed by 10 investors, each of whom will own 10% of the business. The…

A: Under the government tax rule Partnership business is treated as seperate Set of Body.  Share of…

Q: McGee Corporation has fixed operating costs of $14 million and a variable cost ratio of 0.60. The…

A: Earning before interest and taxs (EBIT) =Sales-Variable cost-Fixed cost =($ 120 - $ (120 * 0.60) -…

Q: A company's capital structure is 40% debt and 60% equity. The interest cost on its debt is 10% and…

A: Weighted average cost of capital can be used to estimate the rate which should be provided to…

Q: Macon Corporation has a target capital structure consisting of 40% Debt and 60% Common Equity. Macon…

A: To calculate the first break point in the capital structure of Macon Corporation, we need to…

Q: plus-state tax bracket, has a net income of $4 million, and distributes 40% of its earnings as…

A: Recapitalization The process that involves changing the company's capital structure is known as a…

Q: Blue Co., a company with 25% tax rate, has a free cash flow of P150,000,000 for the next year and is…

A: FCF1 = P 150,000,000 Growth rate (g) = 4% Debt to equity (D/E) = 0.25 Cost of debt = Rd = 5% Cost of…

Q: Dickinson Company has $11,980,000 million in assets. Currently half of these assets are financed…

A: Capital structure refers to the mix of long-term financing sources a company uses to operate and…

Q: a. What is the value of the unlevered project (VU)? b. What is the present value of the project…

A: Unlevered value, also known as the firm value, represents the total value of a business or project…

Q: Edsel Research Labs has $28.20 million in assets. Currently half of these assets are financed with…

A: Given:

Q: McMichael, Inc has expected sales of $40 million.  Fixed operating cost is $5 million and the…

A: 1) Computation:

Q: Baghiben

A: Step 1:Computation of EPS before:-Earnings before tax (EBT) = EBIT - (Debt * Interest rate)=…

Q: LANY Corporation is deciding whether to pursue a restricted or relaxed working capital investment…

A: The Fixed Assets Turnover Ratio is Activity Ratio. It is calculated with the help of following…

Q: National Co. is considering whether to pursue a restricted or relaxed current asset investment…

A: Annual sales (S) = P 400000 Fixed assets = P 150000 Debt = Equity = 50% of assets EBIT = P 36000 r =…

Q: You are given the following information concerning a firm: (please show work) Assets required for…

A: Given:

Q: Dickinson Company has $11,820,000 million in assets. Currently half of these assets are financed…

A:

Q: Universal Foods has a debt-to-value ratio of 36%, its debt is currently selling on a yield of 8%,…

A: WACC stands for weighted average cost of capital. A company’s capital is made from different sources…

Q: The tax rate applicable to Ivan Co. is 20%. The firm pays 5% interest on the P350,000 outstanding…

A: Interest paid = Face value of Loan * Interest rate =350000 * 5% = 17500

Q: ABC Inc. desires to maintain a capital structure of 80% equity and 20% debt. They currently have an…

A: Weighted average cost of capital: Weighted average cost of capital is the rate at which the future…

Q: Quigley Inc. is considering two financial plans for the coming year. Management expects sales to be…

A: ROE is the return on equity and can be measured by the dividing net income by the equity and changes…

Q: The financial breakeven point of Soil Inc. is P90,000, while the tax rate applicable to the company…

A: Interest paid = Outstanding loan * Interest rate = 200000*10% = P20000

Q: Legget industries has total assets of $1,050,000 and total current liabilities (consisting only of…

A: Return on Equity (ROE) is the ratio used to calculate the profitability of the business in relation…

Q: A company finances its operations with 57 percent debt and the rest using equity. The annual yield…

A: Weighted Average cost of capital helps in determining the cost of financing with different capital…

Q: Linkcomn expects an Eamnings after Taxes of 7500005 every year. The firm currently has 100% Equity…

A: Earnings after tax(EAT) = 7500005 Cost if Equity (ke) = 12% Value of a firm is the present value of…

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.