EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
17th Edition
ISBN: 9781260464900
Author: BLOCK
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 18, Problem 6P
Planetary Travel Co. has
a. What is the legal limit on current dividends?
b. What is the practical limit based on liquidity?
c. If the company pays out the amount in part b, what is the dividend payout ratio? (Compute this based on total dollars rather than on a per share basis because the number of shares is not given.)
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Need answer the accounting question
A company had additions to retained earnings for the year just ended of Br. 275,000. The firm paid out Br. 150,000 in cash dividends from current earnings, and it has ending total equity of Br. 6 million. If the firm currently has 125,000 shares of common stock outstanding, what are earnings per share? Dividends per share? Book value per share? If the stock currently sells for Br. 95 per share, what is the market-to-book ratio? And, the price-earnings ratio?
The Carlton Corporation has $4 million in
earnings after taxes and 2 million shares
outstanding. The stock trades at a P/E of 30.
The firm has $1 million in excess cash.
a. Compute the current price of the stock.
(Do not round intermediate calculations and
round
your answer to 2 decimal places.)
b. If the $1 million is used to pay dividends,
how much will dividends per share be? (Do
not round intermediate calculations and
round your answer to 2 decimal places.)
Chapter 18 Solutions
EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
Ch. 18 - Prob. 1DQCh. 18 - Prob. 2DQCh. 18 - Prob. 3DQCh. 18 - Prob. 4DQCh. 18 - Prob. 5DQCh. 18 - Prob. 6DQCh. 18 - Prob. 7DQCh. 18 - Prob. 8DQCh. 18 - Prob. 9DQCh. 18 - Prob. 10DQ
Ch. 18 - Prob. 11DQCh. 18 - Prob. 1PCh. 18 - Prob. 2PCh. 18 - Prob. 3PCh. 18 - Prob. 4PCh. 18 - Prob. 5PCh. 18 - Planetary Travel Co. has $240,000,000 in...Ch. 18 - Prob. 7PCh. 18 - Prob. 8PCh. 18 - In doing a five-year analysis of future dividends,...Ch. 18 - Prob. 10PCh. 18 - The shares of the Dyer Drilling Co. sell for $60 ....Ch. 18 - Prob. 12PCh. 18 - Prob. 13PCh. 18 - Phillips Rock and Mud is trying to determine the...Ch. 18 - Prob. 15PCh. 18 - Prob. 16PCh. 18 - Prob. 17PCh. 18 - Prob. 18PCh. 18 - Prob. 19PCh. 18 - Prob. 20PCh. 18 - Prob. 21PCh. 18 - Prob. 22PCh. 18 - Prob. 3WE
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Also, assume that the dividends paid to common stockholders for last year were 2,600,000 and that the market price per share of common stock is 51.50. Required: 1. Compute the dividends per share. 2. Compute the dividend yield. (Note: Round to two decimal places.) 3. Compute the dividend payout ratio. (Note: Round to two decimal places.)arrow_forwardSuppose you have the following information about a company. Calculate the stock price per share. A company has a current value of operations of $400 million. The company has $80 million in short-term investments, $200 million in debt and 10 million shares outstanding.arrow_forwardAn analyst's calculation of Bear Corporation's enterprise value is $3.2 billion. Bear has $389 million in cash, $750 million in debt, and 35 million shares outstanding. What is this analyst's valuation of one share of Bear Corp's stock? Enter your answer in dollars and round to the nearest cent. Do not include the dollar sign ($).arrow_forward
- A firm has a market value equal to its book value. Currently, the firm has $500,000 of excess cash, $4,500,000 in other assets, $1,000,000 in liabilities, $40,000 in common stock at $1 par, $0 in retained earnings, and $30,000 in net income. Assume that the firm uses all of its excess cash to repurchase some of its shares outstanding. How many shares will be outstanding after the repurchases are completed? (Round, if necessary, your final answer to the whole number).arrow_forwardThe equity of Blooming Roses has a total market value of $16,000. Currently, the firm has excess cash of $1,200 and net income of $15,400. There are 750 shares of stock outstanding. What will be the percentage change in the stock price per share if the firm pays out all of its excess cash as a cash dividend?arrow_forwardA firm has a market value equal to its book value. Currently, the firm has excess cash of $7,000 and other assets of $21,000 Equity is worth $28,000. The firm has 600 shares of stock outstanding and net income of $2,400. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? Multiple Choicea). $64b). $43c). $35d). $39e). $60arrow_forward
- You are given the following information: Stockholders’ equity as reported on the firm’s balance sheet 5 $6.5 billion, price ∕ earnings ratio 5 9, com- mon shares outstanding 5 180 million, and market/book ratio 5 2.0. The firm’s market value of total debt is $7 billion, the firm has cash and equivalents totaling $250 million, and the firm’s EBITDA equals $2 billion. What is the price per share? what is firm EV/EBITDA ?arrow_forwardThe balance sheet for Throwing Copper, Inc., is shown here in market value terms. There are 28,000 shares of stock outstanding. Market Value Balance Sheet: Cash $ 111,000, Fixed assets 524,600, Equity $635,600, Total $635,600. The company has announced it is going to repurchase $22,400 worth of stock instead of paying a dividend of $.80. What effect will this transaction. have on the equity of the firm? (Input the answer as positive value. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) How many shares will be outstanding after the repurchase? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) What will the price per share be after the repurchase? (Do not round intermediate calculations and round your answer to 2 decimal places)arrow_forwardYou are given the following information: Stockholders' equity as reported on the firm's balance sheet = $4 billion, price/earnings ratio = 20.5, common shares outstanding = 60 million, and market/book ratio = 1.7. The firm's market value of total debt is $8 billion; the firm has cash and equivalents totaling $320 million; and the firm's EBITDA equals $1 billion. What is the price of a share of the company's common stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the firm's EV/EBITDA? Do not round intermediate calculations. Round your answer to two decimal places.arrow_forward
- A firm has a market value equal to its book value. Currently, the firm has excess cash of $300 and other assets of $6,200. Equity is worth $5,000. The firm has 500 shares of stock outstanding and net income of $720. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase?arrow_forwardIf a firm has retained earnings of $3.7 million, a common shares account of $5.7 million, and additional paid-in capital of $11.4 million, how would these accounts change in response to a 10 percent stock dividend? Assume market value of equity is equal to book value of equity. (Enter your answers in dollars not in millions. Input all amounts as positive values. Indicate the direction of the effect by selecting "increase," "decrease," or "no change" from the drop-down menu.) Retained earnings Common stock Additional paid-in capital decrease increase increase to to toarrow_forwardThe balance sheet for Tempest, Inc., Is shown here in market value terms. There are 27,000 shares of stock outstanding. Market Value Balance Sheet Cash $ 117,000 489,960 Equity Fixed assets $606,960 Total $606,960 Total $606,960 The company has declared a dividend of $1.40 per share. The stock goes ex dividend tomorrow. Ignore any tax effects. a. What is the stock selling for today? (Do not round intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) b. What will it sell for tomorrow? (Do not round Intermedlate calculatlons and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price today b. Stock price tomorrow c. What will the balance sheet look like after the dividends are pald? (Do not round Intermedlate calculations and round your answers to the nearest whole number, e.g., 32.) Cash Fixed assets Equity Total Totalarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Earnings per share (EPS), basic and diluted; Author: Bionic Turtle;https://www.youtube.com/watch?v=i2IJTpvZmH4;License: Standard Youtube License