Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
9th Edition
ISBN: 9781259277214
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 2, Problem 3QP
Dividends and
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Using the data from Years n and n-1 below, answer the following questions.
What are the company's assets, liabilities, and shareholder equity in Year n and n- I?
What story does the balance sheet tell about changes in short term investments from Year n-1 to Year n?
What story does the balance sheet tell about changes in notes payable from Year n-I to Year n?
What is the company's net income in Year n and n-I?
please provide answer and explain in detail for all answer all requirements with all working
answer in text
Please solve for earnings per share, return on common stockholders equity, accounts receivable turnover, accounts receivable turnover, average collection period, inventory turnover, days in inventory, times interest earned, asset turnover, debt to assets ratio, and free cash flow
14.
When a company declares a cash dividend, which of the following is true?
a.Assets are decreased.
b.Assets are increased.
c.Liabilities are increased.
d.Shareholders' equity is increased.
Chapter 2 Solutions
Essentials of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 2.1 - Prob. 2.1ACQCh. 2.1 - Prob. 2.1BCQCh. 2.1 - What do we mean by financial leverage?Ch. 2.1 - Explain the difference between accounting value...Ch. 2.2 - What is the income statement equation?Ch. 2.2 - What are the three things to keep in mind when...Ch. 2.2 - Why is accounting income not the same as cash...Ch. 2.3 - What is the difference between a marginal and an...Ch. 2.3 - Do the wealthiest corporations receive a tax break...Ch. 2.4 - Prob. 2.4ACQ
Ch. 2.4 - Prob. 2.4BCQCh. 2.4 - Why is interest paid not a component of operating...Ch. 2 - What is the relationship between current assets...Ch. 2 - What is the purpose of the income statement?Ch. 2 - Prob. 2.3CCh. 2 - Prob. 2.4CCh. 2 - Liquidity. What does liquidity measure? Explain...Ch. 2 - Accounting and Cash Flows. Why is it that the...Ch. 2 - Book Values versus Market Values. In preparing a...Ch. 2 - Prob. 4CTCRCh. 2 - Prob. 5CTCRCh. 2 - Prob. 6CTCRCh. 2 - Prob. 7CTCRCh. 2 - Net Working Capital and Capital Spending. Could a...Ch. 2 - Prob. 9CTCRCh. 2 - Firm Values. Referring back to the examples used...Ch. 2 - Building a Balance Sheet. Bear Tracks, Inc., has...Ch. 2 - Building an Income Statement. Pharrell, Inc., has...Ch. 2 - Dividends and Retained Earnings. Suppose the firm...Ch. 2 - Per-Share Earnings and Dividends. Suppose the firm...Ch. 2 - Prob. 5QPCh. 2 - Tax Rates. In Problem 5, what is the average tax...Ch. 2 - Calculating OCF. Hailey, Inc., has sales of...Ch. 2 - Prob. 8QPCh. 2 - Calculating Additions to NWC. The December 31,...Ch. 2 - Cash Flow to Creditors. The December 31, 2015,...Ch. 2 - Cash Flow to Stockholders. The December 31, 2015,...Ch. 2 - Prob. 12QPCh. 2 - Market Values and Book Values. Klingon Widgets,...Ch. 2 - Prob. 14QPCh. 2 - Using Income Statements. Given the following...Ch. 2 - Prob. 16QPCh. 2 - Prob. 17QPCh. 2 - Prob. 18QPCh. 2 - Net Income and OCF. During the year, Belyk Paving...Ch. 2 - Prob. 20QPCh. 2 - Prob. 21QPCh. 2 - Prob. 22QPCh. 2 - Prob. 23QPCh. 2 - Net Fixed Assets and Depreciation. On the balance...Ch. 2 - Tax Rates. Refer to the corporate marginal tax...Ch. 2 - Prob. 1CCCh. 2 - Prob. 2CC
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- Calculate the basic earnings power. (Round your answer to 2 decimal places.) Basic earnings power Calculate the return on assets. (Round your answer to 2 decimal places.) Return on assets % Return on equity % Calculate the return on equity. (Round your answer to 2 decimal places.) % Calculate the dividend payout. (Round your answer to 2 decimal places.)arrow_forwardWhen would a company be able to declare a cash dividend?arrow_forwardUse the following balance sheet and income statement to calculate the firm's return on equity: Balance Sheet Assets: Cash Accounts Receivable Inventories Land Other Fixed Assets Liabilities & Owners' Equity Accounts Payable Long Term Debt Common Stock Paid in Capital Retained Earnings 30.3% 28.0% 27.5% O 45.1% 36.2% $9,000 26,000 19,500 49,000 70,000 12,000 53,400 2,000 80,000 26,100 Income Statement Sales (all credit) Cost of Goods Sold Operating Expenses Depreciation Interest Expense Taxes $255,000 (153,000) (45,000) (3,000) (9,000) (15,300)arrow_forward
- One major component of Equity is Retained Earnings. What does Retained Earnings represent? Group of answer choices If the company took all of their assets and paid off all of their liabilities, this is what would be remaining. This represents the amount of cash currently in the company that belongs to the owners. This represents the value of what the owners put into the company, when they put it in. This represents all of the profits (minus all of the losses), minus dividends paid out to owners, that have been kept in the company. This represents the amounts the company owes to the owners, plus whatever interest rate they agreed to pay.arrow_forwardUnder what situation will return on equity be higher than return on investment? a. When assets exceed liabilities. b. When the debt to equity ratio is greater than 1.0. c. When net income is higher than it was in the previous year. d. When a company earns more on borrowed money than the interest it must pay.arrow_forwardPlease do not provide answer in image formate thnak you. 1. Compute the net profit margin, total asset turnover, return on total assets, and return on common stockholders’ equity for both companies. 2. Assume each company paid a cash dividend of $1.50 per share and that each company’s stock can be purchased at $25 a share. Compute each company’s price earnings ratio and dividend yield. 3. Identify which company’s stock you would recommend as the better investment and explain why.arrow_forward
- Accounting choose the correct answer: a) The analysis of a firm's profitably includes all of the following Except: 1- Return on Equity. 2- Receivable turnover. 3- Fixed asset turnover. b) If a company's P/E ratio is 12.5 and the company's share price is $17.50 per share what is the company's EPS? 1-$ 0.40 2-$ 5 3-$ 1.40arrow_forwardWhen is the return on assets equal to the return on equity? a. When the company issues equal amounts of long-term debt and common stock. b. When the company only issues equity to finance its borrowing. c. When the current ratio of the company equals 1. d. When the company issues no dividends for a given time period.arrow_forwardWhich one of the following equations represents retained earnings activity at the end of the year? a. Beginning Balance + Net Income + Dividends b. Beginning Balance + Cash Inflows - Dividends c. Beginning Balance + Dividends - Net Income d. Beginning Balance - Dividends + Net Incomearrow_forward
- Compute the company’s free cash flow to equity using the residual income modelarrow_forwardWhich of the following is correct? Select one: a. Unearned revenues are considered increases to stockholders' equity. b. Working capital is measured as current liabilities minus current assets. C. Unearned revenues will eventually become revenue earned. d. Working capital increases when a company pays the principal on a long-term note.arrow_forwardCan you help me with #11-#13?arrow_forward
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Dividend explained; Author: The Finance Storyteller;https://www.youtube.com/watch?v=Wy7R-Gqfb6c;License: Standard Youtube License