What is Tikki's ROE for 2008 on these general accounting question You are thinking of investing in Tikki's Torches, Inc. You have onlythe following information on the firm at year-end 2008: netincome = $620,000, total debt = $13.2 million, debt ratio = 42%.What is Tikki's ROE for 2008?A. 3.40%B. 11.19%C. 4.70%D. 1.97%

Step 1: Define Return on EquityIt is that part of net profits which is available for equity…

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Entrepreneurial Finance

6th Edition

ISBN:9781337635653

Author:Leach

Publisher:Leach

Chapter14: Security Structures And Determining Enterprise Values

Section: Chapter Questions

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You are thinking of investing in Nikki T's, Incorporated. You have only the following information on the firm at year-end: Net income is $250,000, total debt is $2.5 million, and debt ratio is 55 percent. What is Nikki T's ROE for next year? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. ROE %
You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = = a. Sustainable growth rate b. Additional borrowing c. Growth rate $ 280,000 $ 17,700 $ 6,500 $ 60,000 $ 91,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. Answer is complete but not entirely correct. 24.14% $ 11,574.00 X 4.00 %
You've collected the following information about Caccamisse, Incorporated: Sales Net income Dividends Total debt Total equity = a. Sustainable growth rate b. Additional borrowing c. Growth rate = = = = $ 330,000 $ 18,700 $ 7,500 $ 70,000 $ 101,000 a. What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. Assuming it grows at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. c. What growth rate could be supported with no outside financing at all? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. % %
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Profitability and Asset Management Ratios You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2018: net income = $600,000, total debt = $13.0 million, debt ratio = 40%. What is Tikki's ROE for 2018?
The following information is available for a company. Set up the income statement and balance sheet for 2008, then forecast the income statement and balance sheet for 2009, assuming sales grow by 15% During 2008 the company is going to buy a $300,000 machine, depreciated SL over 6 years. It will do its financing for next year using bonds that have a coupon rate of 8%. It pays off $100,000 a year on its long term debt. 2008 2009 Additional Financing Necessary Dividends (30% payout) Taxable Income Depreciation $50,000 Cash $175,000 Accruals $50,000 Raw material $400,000 Curr. Assets LTD at 10% $600,000 Labor $312,500 Accum. Depr. $475,000 ST portion of LTD $100,000 A/P $50,000 TL & NW Operating Costs $125,000 A/R $275,000 Curr. Liab. GFA $1,550,000 Sales…
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Consider a simple firm that has the following market-value balance sheet: Assets Liabilities & Equity $1,000 Debt $400 Equity 600 Next year, there are two possible values for its assets, each equally likely: $1,190 and $960. Its debt will be due with 5.1% interest. Because all of the cash flows from the assets must go either to the debt or the equity, if you hold a portfolio of the debt and equity in the same proportions as the firm's capital structure, your portfolio should earn exactly the expected return on the firm's assets. Show that a portfolio invested 40% in the firm's debt and 60% in its equity will have the same expected return as the assets of the firm. That is, show that the firm's WACC is the same as the expected return on its assets. If the assets will be worth $1,190 in one year, the expected return on assets will be 19 %. (Round to one decimal place.) If the assets will be worth $960 in one year, the expected return on assets will be 4%. (Round to one decimal place.) -…
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You are thinking of investing in Tikki's Torches, Inc. You have only the following information on the firm at year-end 2008: net income = $620,000, total debt = $13.2 million, debt ratio = 42%. What is Tikki's ROE for 2008? A. 3.40% B. 11.19% C. 4.70% D. 1.97%