Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
11th Edition
ISBN: 9780077861759
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Textbook Question
Chapter 3, Problem 4QP
EFN The most recent financial statements for Heine, Inc., are shown here:
Assets and costs arc proportional to sales. Debt and equity are not. A dividend of $3,500 was paid, and the company wishes to maintain a constant payout ratio. Next year’s sales are projected to be $45,426. What external financing is needed?
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You've collected the following information about Hendrix Guitars, Incorporated:
Profit margin
Total asset turnover
Total debt ratio
Payout ratio
4.42%
3.30
.27
278
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.
Sustainable growth rate
%
Provide solution
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Chapter 3 Solutions
Corporate Finance (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 3 - Financial Ratio Analysis A financial ratio by...Ch. 3 - Industry-Specific Ratios So-called same-store...Ch. 3 - Sales Forecast Why do you think most long-term...Ch. 3 - Sustainable Growth In the chapter, we used...Ch. 3 - EFN and Growth Rate Broslofski Co. maintains a...Ch. 3 - Common-Size Financials One tool of financial...Ch. 3 - Asset Utilization and EFN One of the implicit...Ch. 3 - Comparing ROE and ROA Both ROA and ROE measure...Ch. 3 - Ratio Analysis Consider the ratio EBITD/Assets....Ch. 3 - Return on Investment A ratio that is becoming more...
Ch. 3 - Use the following information to answer the next...Ch. 3 - Prob. 12CQCh. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - DuPont Identity If Wilkinson, Inc., has an equity...Ch. 3 - Equity Multiplier and Return on Equity Synovec...Ch. 3 - Using the DuPont Identity Y3K, Inc., has sales of...Ch. 3 - EFN The most recent financial statements for...Ch. 3 - Sales and Growth The most recent financial...Ch. 3 - Sustainable Growth If the Hunter Corp. has a ROE...Ch. 3 - Sustainable Growth Assuming the following ratios...Ch. 3 - Calculating EFN The most recent financial...Ch. 3 - External Funds Needed Dahlia Colby, CFO of...Ch. 3 - Sustainable Growth Rate The Wintergrass Company...Ch. 3 - Return on Equity Firm A and Firm B have debt-total...Ch. 3 - Ratios and Foreign Companies Prince Albert Canning...Ch. 3 - External Funds Needed The Optical Scam Company has...Ch. 3 - Days Sales in Receivables A company has net income...Ch. 3 - Ratios and Fixed Assets The Whisenhunt Company has...Ch. 3 - Calculating the Cash Coverage Ratio Panda Inc.s...Ch. 3 - Prob. 17QPCh. 3 - Prob. 18QPCh. 3 - Prob. 19QPCh. 3 - Fixed Assets and Capacity Usage For the company in...Ch. 3 - Calculating EFN The most recent financial...Ch. 3 - Prob. 22QPCh. 3 - Prob. 23QPCh. 3 - EFN and Internal Growth Redo Problem 21 using sale...Ch. 3 - Prob. 25QPCh. 3 - Prob. 26QPCh. 3 - Prob. 27QPCh. 3 - Sustainable Growth Rate Based on the results in...Ch. 3 - Prob. 29QPCh. 3 - Prob. 30QPCh. 3 - Prob. 1MCCh. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MC
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- You've collected the following information about Hendrix Guitars, Incorporated: Profit margin Total asset turnover Total debt ratio Payout ratio 1 T Sustainable growth rate - I 4.41% 3.20 .28 26% What is the sustainable growth rate for the company? Note: Do not round intermediate calculations and enter your answer as a percent roundec Answer is complete but not entirely correct. 11.75 %arrow_forwardCreative Analysis, Inc. is currently operating at maximum capacity. Assume that all costs and net working capital vary directly with sales. The dividend payout ratio will remain constant. How much is the External Financing needed (EFN) if sales are projected to increase by 10%? Income Statement end of last year: Sales $8,500 Costs $7,960 Net Income $540 Dividends paid = $324 Balance Sheet as of end of last year: Cash Accounts Receivables Inventory Net Fixed Assets Total assets -$25.1 $156.1 O $296.5 -$67.6 O $274.9 Assets $1,600 $975 $2,425 $2,200 $7,200 Accounts Payable Long-Term Debt Common Stock Retained Earnings Total Liabilities & Equity Liabilities & Equity $2,075 425 $3000 $1,700 $7,200arrow_forwardYou are given the following information for Hendrix Guitars, Incorporated: Profit margin Total asset turnover Total debt ratio Payout ratio 6.3% 1.6 Sustainable growth rate .44 35% Calculate the sustainable growth rate. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) %arrow_forward
- Need answer the questionarrow_forwardLoreto Inc. has the following financial ratios: asset turnover = 1.60; net profit margin (i.e., net income/sales) = 6%; payout ratio = 30%; equity/assets = 0.50. a. What is Loreto's sustainable growth rate? b. What is its internal growth rate? (Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.) A. Sustainable growth rate _______% B. Internal growth rate ______%arrow_forwardLoreto Inc. has the following financial ratios: asset turnover = 2.40; net profit margin (i.e., net income/sales) = 5%; payout ratio = 30%; equity/assets = 0.40. a. What is Loreto's sustainable growth rate? b. What is its internal growth rate?arrow_forward
- A firm with current assets of $85,750 and current liabilities of $62,958 would have: A. A current ratio of 1.37 B. $1.37 of current assets for every $1 of current liabilities C. A positive current ratio, dependant on the pace of inventory sales and lean repayments D. All of the abovearrow_forwardUsing the DuPont method, evaluate the effects of the following relationships for the Butters Corporation. A.Butters Corporation has a profit margin of 5.5 percent and its return on assets (investment) is 8.75 percent. What is its assets turnover? Round your answer to 2 decimal places. ______ times B.If the Butters Corporation has a debt-to-total-assets ratio of 65.00 percent, what would the firm’s return on equity be? Note: Input your answer as a percent rounded to 2 decimal places. C.What would happen to return on equity if the debt-to-total-assets ratio decreased to 60.00 percent? Input your answer as a percent rounded to 2 decimal places.arrow_forwardFind the external finance neededarrow_forward
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