The corporation has current assets of P5 million, current liabilities of P5 million,net fixed assets of P25 million, long term liabilities of P10 million, and equity ofP15 million.What will happen to the current ratio of the corporation if the corporation sellsP1 million worth of inventory for cash?O Liability will increase.O Decrease.O The same.Increase.

Current ratio is an important liquidity ratio that measures the ability of the business to meet its…

Answered: The corporation has current assets of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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An all equity corporation has net income of $63,313and a required rate of return of 0.14%. What would the value of this firm be if it borrowed $141,848 to buy back some of its stock? Assume a corporate tax rate of 0.45%.
If the value of a levered firm is $7 million, what is the value of the same firm with all-equity financing? Assume MM with taxes holds. a. $7 million O b. $6 million O c. $9 million O d. $8 million
FinCorp's free cash flow to the firm (FCFF) is reported as $200 million. The firm's interest expense is $25 million. Assume the tax rate is 35% and the net debt of the firm increases by $3 million. What is FinCorp's free cash flow to the equity (FCFE)? $185.75 million $186.75 million $187.75 million $188.75 million
(b)Assume that Angostura is currently operating at fullcapacity. All costs/expenses/income and net working capital vary directly withsales/revenue.Interest Expenses will remainunchanged. The tax rate and the dividend pay-out ratiowill remainconstant.How much additional debt is required, if any, if no new equity is raised and sales/revenue are projected to increaseby10%?
The Stewart Company has $1,295,000 in current assets and $543,900 in current liabilities. Its initial inventory level is $259,000, and it will raise funds as additional notes payable and use them to increase inventory. How much can its short-term debt (notes payable) increase without pushing its current ratio below 2.0? Round your answer to the nearest dollar. $
Archer Limited is expected to trade at a price earnings ratio of 4,5. The market price per share is expected to be R36 before the dividend payment and the price‐earnings (P/E) ratio is based on this price. The company has 1 250 000 shares in issue.Archer Limited’s goal is not to expand its operations, but rather to keep its capital investment equivalent to the current depreciation charge. The company’s earnings are expected to remain constant for the foreseeable future. Management is deciding whether to distribute all its net income for the year as a dividend, or to engage in a share buy‐back at the current price, inclusive of the expected dividend. Neither decision is expected to have any impact on the P/E ratio.REQUIRED: Calculate the net profit after tax. Calculate the total number of shares to be repurchased. Round off your answer to the nearest whole number. Calculate the number of shares in issue after the…
If a company has $181,000 in total liabilities and $225,000 in total assets,what percentage of total assets is being financed with the use of other people’smoney?
KMS corporation has assets of $650 million, $65 million of which are cash. It has debt of $216.7 million. If KMS repurchases $21.7 million of its stock: a. What changes will occur on its balance sheet? b. What will be its new leverage ratio? a. What changes will occur on its balance sheet? (Select the best choice below.) A. Both the cash balance and shareholder equity will drop by $21.7 million. B. Both the cash balance and shareholder equity will increase by $21.7 million. C. Both accounts receivable and shareholder equity will drop by $21.7 million. D. Debt will increase by $21.7 million and shareholder equity will decrease by $21.7 million. b. What will be its new leverage ratio? The new leverage ratio after the repurchase is %. (Round to one decimal place.)
(b) Nik Syak Dental Berhad has net income of RM3,000,000 and it has 2,000,000 outstanding common shares. The company's share currently trades at RM45 a share. Nik Syak is considering a plan where it will use available cash to repurchase 30 percent of its shares in the open market. The repurchase is expected to have no effect on either net income or the company's P/E ratio. Calculate the firm's new share price.
A company has total owners' equity of $0.622 billion, market-to-book ratio of 4.2, its leverage ratio of 3.2, and it has cash of $800 million. How much would it cost to take over this business assuming you pay its enterprise value? O $2.8 million O $2.5 billion O $3.8 billion O $4.5 million
14
Bhupatbhai

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