Intermediate Financial Management (MindTap Course List)
12th Edition
ISBN: 9781285850030
Author: Eugene F. Brigham, Phillip R. Daves
Publisher: Cengage Learning
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Chapter 9, Problem 6Q
a)
Summary Introduction
To discuss: Whether an increase in dividend pay-out ratio increases the non-spontaneous financial requirements (AFN).
b)
Summary Introduction
To discuss: Whether the given situation will increase or decrease non-spontaneous financial requirements (AFN).
c)
Summary Introduction
To discuss: Whether the given situation will increase or decrease non-spontaneous financial requirements (AFN).
d)
Summary Introduction
To discuss: Whether the given situation will increase or decrease non-spontaneous financial requirements (AFN).
e)
Summary Introduction
To discuss: Whether the given situation will increase or decrease non-spontaneous financial requirements (AFN).
f)
Summary Introduction
To discuss: Whether the given situation will increase or decrease non-spontaneous financial requirements (AFN).
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Suppose a firm makes the following policy changes. If the change means that external nonspontaneousfinancial requirements (AFN) will increase, indicate this with a (+); indicate adecrease with a (-); and indicate an indeterminate or negligible effect with a (0). Think interms of the immediate short-run effect on funds requirements.a. The dividend payout ratio is increased. _____________b. Rather than produce computers in advance, a computer companydecides to produce them only after an order has been received. _____________c. The firm decides to pay all suppliers on delivery, rather than aftera 30-day delay, to take advantage of discounts for rapid payment. _____________d. The firm begins to sell on credit. (Previously, all sales had been on acash basis.) _____________e. The firm’s profit margin is eroded by increased competition; sales aresteady. _____________f. Advertising expenditures are stepped up. _____________g. A decision is made to substitute long-term mortgage bonds for…
Given that all other factors are constant, External Fund Requirement is
O a. Directly related to growth rate of sales
O b. Inversely proportional to dividend payout ratio
Oc. Inversely related to growth rate of sales
Od. Directly related to net profit margin
Which of the following decision criteria is the easiest to use and very popular among investors?
O Payback period.
O Internal rate of return.
O Average accounting return.
Net present value.
O Discounted return on investment.
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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
- How would you classify dividends from investments on a cash budget? a. Cash brought forward b. Payment c. Receipt d. Opening balance When comparing mutually exclusive alternatives that have different lives by the present worth method, it is necessary to: a. Always compare them over a time period of equal service b. Find the present worth over one life cycle of each alternative c. Always compare them over a period equal to the life of the shorter-lived alternative d. Always compare them over a period equal to the life of the longer-lived alternativearrow_forwardWhich of the following statements are not true Select one: a. Profitability Index is a discounted technique b. Capitalisation are the total securities issued by a company c. Cash flows occurs over a series of years in capital budgeting decisions d. Some investment decisions are irreversible e. Borrowing is cheap compared to equityarrow_forwardA firm will have a financing _________ whenever projected assets are greater than projected liabilities and equity. This is best remedied with _________. Deficit; line of credit Deficit; special dividend Surplus; line of credit Surplus; special dividendarrow_forward
- All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)? O A lower capital intensity ratio. A lower dividend payout ratio. A higher spontaneous-liabilities-to-sales ratio A higher profit margin. An increase in its forecasted sales.arrow_forwardNPV measures a. the change in firm value b. the profitability of an investment c. the change in wealth d. the present value of the future net cash flows from the investment e. all of the abovearrow_forwardMultiple Choice Questions 1. The following are the factors to be considered in Suitability, except A. Environment B. Capabilities C. Expectations D. Scenarios 2. The ____________ for a firm is the internal rate of return on existing investments, based on real cash flows. A. cash flow return on investment (CFROI) B. Economic Value Added (EVA) C. Total Shareholders Return D. Return on Investment 3. The elements that must be considered in using EVA are as follows, except ___________. A. Reasonableness of earnings B. Appropriate cost of Capital C. Volatility of the market D. None of the abovearrow_forward
- When we use the AFN equation to forecast the additional funds needed (AFN), we are implicitly assuming that all financial ratios are constant. A. True B. Falsearrow_forwardDividend Decision and Capital Budgeting 1. Dividends: (Essay) a. Define what is Dividend b. Enumerate the types of dividend and define each. c. In your point of view, why is Dividend Decision an important role for Finance Managers. Explain your answer accordingly.arrow_forwardQuestion: What does ROI stand for in finance? a) Return on Investmentb) Risk of Inflationc) Revenue over Incomed) Rate of Interestarrow_forward
- Please answer the following questions 1. _________________ is the discounted net future cash inflows divided by the initial cash outlay. a.Payback b.NRV c.Profitability Index d.IRR 2. __________________________ serves as a framework for measuring performance. a.NRV b.Payback c.Profitability Index d.Balanced Scorecard 3. Which of the following is a performance measures of the balanced scorecard: a.internal Business perspective b.all of the answers are correct c.financial Perspective d.customer perspectivearrow_forwardPlease answer the following question. In this method, the company compares the amount spent on the investment with the discounted expected future cash inflows. a.Payback b.NRV c.Investment d.IRRarrow_forwardof stion According to MM Case II, if the expected return on assets decreases, what happens to the expected return on equity? Select one: Oa increases O b. remains constant Oc decreases O d. depends on the firm's capital structure Time learrow_forward
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