b mgt120h-a17.pdf Page 4 of 10 11. Corporations generally issue stock dividends in order to a. Increase the market price per share. b. Exceed shareholders' dividend expectations. c. Increase the marketability of the shares. d. Decrease the amount of capital in the corporation. 12. Units of production is an appropriate depreciation method to use when a. It is impossible to determine the productivity of the asset. b. The asset's use will be constant over its useful life. 13 Goodwill can be recorded Cost-Volume-Profit Analysis c. The productivity of the asset varies significantly from one period to another. d. The company is a manufacturing company. The Effect Of Prepaid Taxes On Assets And Liabili. ✪ → Q Search Debenture Valuation

b mgt120h-a17.pdf Page 4 of 10 11. Corporations generally issue stock dividends in order to a. Increase the market price per share. b. Exceed shareholders' dividend expectations. c. Increase the marketability of the shares. d. Decrease the amount of capital in the corporation. 12. Units of production is an appropriate depreciation method to use when a. It is impossible to determine the productivity of the asset. b. The asset's use will be constant over its useful life. 13 Goodwill can be recorded Cost-Volume-Profit Analysis c. The productivity of the asset varies significantly from one period to another. d. The company is a manufacturing company. The Effect Of Prepaid Taxes On Assets And Liabili. ✪ → Q Search Debenture Valuation

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 4TP: You are considering two possible companies for investment purposes. The following data is available...

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When analysing a company, the equity sales person has noticed that the company has incurred a large development cost relating to a new product and has stated that the costs meet the necessary criterion to be capitalised. The analyst feels a more reasonable treatment of this item would be to expense it, in the year incurred. The company has a tax rate of 30%. The company acquires 100% of shares in another company called Horizon for cash of £4.8 million. Net assets Horizon are £3.3m.There is an upward fair value adjustment of £0.4 m required to the acquirees’ net assets. The acquired company has a 0.2, in process development costs that have not been previously recognised but now meet the necessary capitalisation criteria. Explain how a company could acquire intangible assets. With regard to the development costs, what will be the implication for the financial statements of the two different approaches? Include any relevant ratios.
Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stock prices and also to increase the value of stock options. Such pressure may cause some managers to alter their estimates for depreciation to artificially create desired results.Required: 1. Understand the reporting effect: Do estimates by management affect the amount of depreciation in its company’s financial statements? 2. Specify the options: To increase earnings in the initial years following the purchase of a depreciable asset, would management (a) choose straight-line or double-declining balance, (b) estimate a longer or shorter service life, and (c) estimate a higher or lower residual value? 3. Identify the impact: Are decisions of investors and creditors affected by accounting estimates? 4. Make a decision: Should a company alter depreciation estimates for the sole purpose of meeting expectations of Wall Street analysts?
Please 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.
CELFIN S.A. is not a publicly traded company and is faced with determining cost of capital rate to evaluate various investment projects. Following table shows data of companies that are traded on stock exchange and belong to same industrial sector in which CELFIN operates. Firm Beta of stock Stock market presence R2 Value Target debt Ratio (D/P) Cost of debt CARMAQ 1,20 90% 40% 1 5% JOSAR 1,35 95% 36% 0,8 2,5% PABSAN 1,65 96% 35% 1,5 3% VICUNF -0,15 15% 0,3% 0,5 2,55% ALTAINVER 1,10 97% 35% 0,6 2,5% CRISMELL -0,10 10% 0,5% 0,6 2,5% Target debt ratio (D/P) is 1.2 and its cost of debt is 4.5%. Corporate tax rate is 25%, risk-free rate is 2.5% and market risk premium is 7.5%. Assume that equity illiquidity premium is 2% for CELFIN stocks.Determine:a) CELFIN's cost of capital.b) Cost of Equity of CELFINc) Cost of Equity of all six (6) companies in reference table.
The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.
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.
CALCULATING 3Ms COST OF CAPITAL In this chapter, we described how to estimate a companys WACC, which is the weighted average of its costs of debt, preferred stock, and common equity. Most of the data we need to do this can be found from various data sources on the Internet. Here we walk through the steps used to calculate Minnesota Mining Manufacturings (MMM) WACC. 1. As a first step, we need to estimate what percentage of MMMs capital comes from debt, preferred stock, and common equity. This information can be found on the firms latest annual balance sheet. (As of year end 2013, MMM had no preferred stock.) Total debt includes all interest-bearing debt and is the sum of short-term debt and long-term debt. a. Recall that the weights used in the WACC are based on the companys target capital structure. If we assume that the company wants to maintain the same mix of capital that it currently has on its balance sheet, what weights should you use to estimate the WACC for MMM? b. Find MMMs market capitalization, which is the market value of its common equity. Using the sum of its short-term debt and long-term debt from the balance sheet (we assume that the market value of its debt equals its book value) and its market capitalization, recalculate the firms debt and common equity weights to be used in the WACC equation. These weights are approximations of market-value weights. Be sure not to include accruals in the debt calculation.
15. Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 4.10%; RPM = 5.20%; and b = 2.00. Based on the CAPM approach, what is the cost of equity from retained earnings?
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings? Please show formula and answer
As a consultant to Basso Inc., you have been provided with the following data: D1 = $0.68; P0 = $28.50; and g = 7.00% (constant). What is the cost of common from retained earnings based on the DCF approach? Group of answer choices 10.14% 9.10% 9.48% 9.39% 8.64%
Listed Digital Industry players have the following market value and earnings per share: Player Market Value per share Earnings per share P/E Ratio A 46.50 5.00 B 45.24 6.03 C 16.25 2.18 D 25.11 3.72 E 34.32 4.29 An analyst is looking into the performance of another firm in the same industry but is not listed, the company reported earnings of Php 1.25 per share. How much is the value of the firm?
Assume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.80; P0 = $32.50; and g = 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach?