1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000000 TL and its net profit is 300 000 TL.a) Find the profit margin, ROA and ROE of that firm.b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; willyou suggest to buy the shares of that firm in the stock market? Why or why not?2) a) The following information is given. The expected rate of return of the index in next year is 30%, current annual rate ofreturn of T-Bills is %15. We consider a stock whose beta is 1.2. It is estimated that this firm will pay a dividend per share of 2 TLnext year. Investors predict that dividends will grow at the constant rate of 15% in future years. Then what may be thefundamental price of that stock?b) Will you consider to buy that stock if its current market value is 12.4 TL pershare?3) In the problem above (question 2); let us assume that investors rather than predicting one growh rate of 15% ; predict twodifferent growh rates. It is estimated that the dividends will grow at the rate of 10% in the next three years. Then the growth rateof dividends will accelerate to 20% starting in the fourth year and that growth rate will continue forever in the rest of future years.Given this; how the fundamental price of that stock changes ? (use the values of Question 2 in the answer. Only the growth rateis different in this question)b) Is that stock a good buy at the price of 12.4 per share with that new fundamental price?2/24) We know that stock A exactly increases 14% when index is up by 10% and declines also 14% when index declines by 10%.Can we find the expected return of that stock if we know that the expected return of the index is 50% and the annual rate ofreturn of T-Bills is 12%?

As posted multiple sub parts we are answering only first three sub parts kindly repost the…

1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000 000 TL and its net profit is 300 000 TL. a) Find the profit margin, ROA and ROE of that firm. b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; will you suggest to buy the shares of that firm in the stock market? Why or why not?

1) Consider a firm whose total assets is 30 000 000 TL. The total debt of that company is 25 000 000. The firm's sales is 5 000 000 TL and its net profit is 300 000 TL. a) Find the profit margin, ROA and ROE of that firm. b) Given that the sector average of profit margin is 10%, sector average of ROA is 4% and sector average of ROE is 8%; will you suggest to buy the shares of that firm in the stock market? Why or why not?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

Assume Plainfield Manufacturing has debt of $6,500,000 with a cost of capital of 9.5% and equity of $4,500,000 with a cost of capital of 11.5%. What is Tylers weighted average cost of capital?
You are considering two possible companies for investment purposes. The following data is available for each company. Additional Information: Company A: Bad debt estimation percentage using the income statement method is 6%, and the balance sheet method is 10%. The $230,000 in Other Expenses includes all company expenses except Bad Debt Expense. Company B: Bad debt estimation percentage using the income statement method is 6.5%, and the balance sheet method is 8%. The $140,000 in Other Expenses includes all company expenses except Bad Debt Expense. A. Compute the number of days sales in receivables ratio for each company for 2019 and interpret the results (round answers to nearest whole number). B. If Company A changed from the income statement method to the balance sheet method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). C. If Company B changed from the balance sheet method to the income statement method for recognizing bad debt estimation, how would that change net income in 2019? Explain (show calculations). D. What benefits do each company gain by changing their method of bad debt estimation? E. Which company would you invest in and why? Provide supporting details.
a firm has an a profit margin of 3.8% and an equity multiplier of 1.90. its sales are 166.0 mil usd, and the firm has total assets of 61.0 mil usd. calculate the firm's roe."
Choose the correct letter of answer: In the current year, Company A had P15 Million in sales, while total fixed costs were held to P6 Million. The firm's total assets at year-end were P20 Million and the debt/equity ratio was calculated at 0.60. If the firm's EBIT is P3 Million, the interest on all debt is 9%, and the tax rate is 40%, what is the firm's return on equity? a. 11.16%b. 14.4%c. 18.6%d. 24.0%e. 28.5%
Wims Inc., has sales of $18.3 million total assts of $13.3 million and total debt of $4.1 million. The profit margin is 11 percent. a. What is the company's net income? b. What is the company's ROA? c. What is the company's ROE?
ADM Pty Ltd has Total Assets of R850 000. Debt ratio for the firm is 80% of which 70% is long term liabilities. The Asset turnover is 6, net profit margin is 12%, the interest rate is 8% and tax rate is 40% for the firm. Calculate the following for the firm: Return on Equity
Last year, Thomas Co. had a profit margin of 10%, total assets turnover of 0.5, and a debt ratio of 20% (the company finances its assets with debt and common equity). This year, the company wats to double ROE. The CFO expects the total assets turnover will remain at 0.5, while the profit margin will increase enough to double ROE. Assume that the profit margin is increased to 15%, what debt ratio will the company need in order to double its ROE?
1. The person in charge of the finances of the company MGT, S.A. wants to know the company's situation concerning the industrial sector to which it belongs. For this, it has the following information regarding the industry: General liquidity ratio is 1.55; the acid test is 1.20, and the ratio between the available and the current liabilities is 0.95. The debt ratio stands at 1.25. The margin on sales is 21%. The investment rotation is 1.45 times. Economic profitability is around 23%, and financial profitability is 29% The data referred to the company (in thousands of €) are the following: Assets Liability and Net Equity Non-current asset (net) 170 Equity 125 Stocks of finished products 45 Reservations 25 Clients 65 External Resources 105 Banks 70 Loans 65 Supplier 30 Total Assets 350 Total Net Equity 350 In addition, it is known that: Sales are € 250,000 and its direct cost of € 105,000. Amortization of…
A firm has a profit margin of 15% on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500.00, and a after-tax interest cost on total debt of 5%, what is the firm's ROA?
Please show work and explain answer 9. A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000, and common stockholders' investment of $750,000 has a return on equity of ________. A) 20 percent B) 15 percent C) 3 percent D) 4 percent 10) The DuPont formula allows a firm to break down its return into the net profit margin, which measures the firm's profitability on sales, and its total asset turnover, which indicates how efficiently the firm has used its assets to generate sales. TRUE FALSE
A company has operating income of Rs. 5,00,000. The firms cost of debt is 10% and firm employs Rs. 15,00,000 of debt. The overall cost of capital of the firm is 15%. What is total value of the firm. & Cost of equity as per MM Theory ( Assuming no taxes)
DTO, Inc., has sales of ₱15 000 000, total assets of ₱12.6 million, and total debt of ₱ 5.6 million. Assume the profit margin is 8%. a. What is the company's net income?b. What is the company's ROA?c. What is the company's ROE?