Essentials Of Investments
11th Edition
ISBN: 9781260316193
Author: Bodie
Publisher: MCG
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Chapter 14, Problem 4PS
The ABC Corporation has a profit margin on sales below the industry average. yet its
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Chapter 14 Solutions
Essentials Of Investments
Ch. 14 - Prob. 1PSCh. 14 - Prob. 2PSCh. 14 - The Crusty Pie Co., which specializes in apple...Ch. 14 - The ABC Corporation has a profit margin on sales...Ch. 14 - A company’s current ratio is 2. If the company...Ch. 14 - Cash flow from investing activities excludes:...Ch. 14 - Cash flow from operating activities includes:...Ch. 14 - Prob. 8PSCh. 14 - Prob. 9PSCh. 14 - Prob. 10PS
Ch. 14 - Prob. 11PSCh. 14 - Use the DuPont system and the following data to...Ch. 14 - A firm has an ROE of 3 , a debt/equity ratio of...Ch. 14 - A firm has a tax burden ratio of 0.75 , a leverage...Ch. 14 - A11 analyst gathers the following information...Ch. 14 - Here are data On two Firms: LO142 Equity ($...Ch. 14 - Prob. 1CPCh. 14 - Which of the following best explains a ratio of...Ch. 14 - Use the Financial statements for Chicago...Ch. 14 - Prob. 4CPCh. 14 - The information in the following table comes from...Ch. 14 - Scott Kelly is reviewing Master Toy’s financial...Ch. 14 - The DuPont formula defines the net return on...Ch. 14 - Go to finance.yahoo.com to find information about...Ch. 14 - Answer the following questions for these two toy...Ch. 14 - Prob. 3WM
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- Which of the following would increase a company’s additional financing needed (AFN)? a) the company’s profit margin increases b) the company’s dividend payout ratio decreases c) the company’s profit margin decreases d) the company has a lot of excess asset capacity e) none of the abovearrow_forwardNEED ASAP. THANK YOU!! 1. Which of the following statements is correct? Group of answer choices - Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio. - If a firm’s assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm’s AFN to be negative. - Dividend policy does not affect the requirement for external funds based on the AFN equation. - AFN is not always positive. - If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm’s actual AFN must, mathematically, exceed the previously calculated AFN.2. When we use the AFN equation to forecast the additional funds needed (AFN), we are implicitly assuming that all financial ratios are constant. Group of answer choices - True…arrow_forwardSuppose a company increases the price of its product and demand hardly declines.which of the following will increase? A) profit margin B) return - on - equity C) taxes D) all the abovearrow_forward
- Which of the following statements is CORRECT? O The more depreciation a firm reports, the higher its tax bill, other things held constant. O People sometimes talk about the firm's net cash flow, which is shown as the lowest entry on the income statement, hence it is often called "the bottom line." O Depreciation and amortization are not cash charges, so neither of them has an effect on a firm's reported profits. O Net cash flow (NCF) is often defined as follows: Net Cash Flow = Net Income + Depreciation and Amortization Charges. O Depreciation reduces a firm's cash balance, so an increase in depreciation would normally lead to a reduction in the firm's net cash flow.arrow_forward13. Which of the following statements is true? a.The tangible capital asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b.The average age of the tangible capital assets is computed by dividing accumulated depreciation by depreciation expense. c.If net sales increases, the tangible capital asset turnover ratio will decrease. d.A relatively low tangible capital asset turnover ratio signals that a company is efficiently using its assets.arrow_forwardThe DuPont ldentity holds that ROE = PM x T/A T/O x EM. However, after doing some quick algebra, ROE still equals net income divided by owner's equity. What does the DuPont Identity accomplish with its expansion of the ROE into profit margin, total asset turnover and equity multiplier components? O The identity allows expanding the ROE into the aftertax income. O The identity uses the ROE in describing such things as the costs of Obamacare. O The identity can reveal the impact of new borrowing on employee morale. O The identity separates the ROE into operating, capital budgeting and capital structure components. O The identity is used by bankers in meeting capital requirements under the Dodd Frank Act.arrow_forward
- Why would a company choose to factor itsreceivables, given that it will get less money than thereceivables are worth?arrow_forward1. A company forecast to have negative economic value added (EVA) forever, will be trading at EV/Capital ratio smaller than one. (All else equal.) True or Falsearrow_forwardWhich one of the following will decrease the net working capital of a firm? Assume the current ratio is greater than 1.0. A. selling inventory at cost B. collecting payment from a customer C. paying a payment on a long-term debt D. selling a fixed asset for book value E. paying a supplier for the purchase of an inventory itemarrow_forward
- True or False: All else being equal, a decrease in a company's profit margin will result in an increase in its return on assets. Select one: True Falsearrow_forwardThere is an old business saying that “You shouldn’t be inbusiness if your company doesn’t earn higher than bankrates.” This means that if a company is to succeed, its return on assets should be significantly higher than its cost of bor-rowing. Why is this so important?arrow_forwardp13 According to the trade-off theory: The amount of debt a company has is irrelevant. Debt will not be used if a company’s tax rate is high. Companies have an optimal level of debt. Debt should be used only as a last resort.arrow_forward
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