Bolton Company substantially increased its allowance for bad debt. Which of the following effects will occur?   Question options:   It will reduce the current ratio.   It will increase the acid test ratio.   It will increase working capital.   It will reduce its dividend payout ratio.

Q: Which of the following statements is correct?   a. Companies may pay too high a price in a large…

A: companies may pay a high price in a large open market to repurchase its shares because it needs to…

Q: Which of the following actions should Paperang Inc. take if it wants to reduce its cash conversion…

A: Cash conversion cycle is that the total period of time taken by the firm to finish its operating…

Q: If the after-tax cost of debt is less than the cost of equity in a fırm, which of the following…

A: The weighted average capital cost (WACC) consists of the measurement of a capital price of the…

Q: Holding assets constant, if debt increases, A. The firms ROA declines B. The firms net income would…

A: Introduction:- An asset is any resource that a corporation or economic organization possesses or has…

Q: By how much would the capital structure shift change the firm's cost of equity?   a. −5.40%     b.…

A: Cost of equity refers to the cost incurred by the company for issuing new equity. When a company use…

Q: Which one of the following factors might cause a firm to increase the debt in its financial…

A: Interest paid on debt is a tax deductible expense, which means that while ascertaining the tax…

Q: Is the claim that lower company taxes adding to investments correct or is it debatable given the…

A: The money left after expenditure is savings. Savings are used by the individuals for investment. Not…

Q: Which of the following is true regarding a company assuming more debt?   Select one: a. Assuming…

A: WHEN A COMPANY BORROWS MONEY TO BE PAID IN FUTURE WITH INTEREST IT IS KNOWN AS DEBT . MORE OF DEBT…

Q: WACC and Optimal Capital Structure F. Pierce Products Inc. is considering changing its capital…

A: The optimal capital structure: The optimal capital structure is the proportion of debt and equity at…

Q: The common stock and debt of Northern Sludge are valued at $70 million and $30 million,…

A: Value of Common Stock =$70 million Value of debt = $30 million Weight of Common stock = 70/(30+70) =…

Q: Which one of the following is not an effect of an increase in leverage     Managers have fewer…

A: Increases in leverage means introducing more debt into capital structure.

Q: How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its…

A: Overview: Weighted average cost of capital (WACC) : Weighted average cost of capital is the mean…

Q: Suppose a company increases the price of its product and demand hardly declines.which of the…

A: The increase in the price off the product where the demand hardly declines will lead to increase in…

Q: How would answer this question? You are estimating your company's external financing needs for the…

A: SOLUTION- Reducing the collection period is the change that we need to make to company’s operating…

Q: Hi-Tech, Inc. has determined that it can minimize its weighted average cost of capital (WACC) by…

A: The WACC is the overall cost of capital from all the sources of finance. The WACC is the minimum…

Q: Consumer prices will increase

A: Correct Answer is :- A Consumer price will increase

Q: w would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its…

A: Note : As per the guidelines, only first three parts will be answered.

Q: Which of the following events is most likely to encourage a firm to INCREASE the amount of debt in…

A: Stability in the business will lead to increase in long term debt

Q: Which of the following actions can a firm take to increase its current ratio? A. Issue short-term…

A: In a business entity, current ratio will be helps to evaluate its ability to pay off short-term…

Q: If Company A uses more debt than Company B and both companies have identical operations in terms of…

A: If A company utilizes more debt than that of B company then, interest will be charged on the debt…

Q: If a firm's marginal tax rate is increased, this means that other things held constant, lower the…

A: After tax cost of debt = Before tax cost of debt * (1-tax rate)

Q: Which of the following would increase the likelihood that a company would increase its debt ratio,…

A: Cetris Perbius Means Other things remaining constant, if the company is considering to increase the…

Q: Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no debt…

A: Given Information:Risk free rate is 6% Market risk premium is 5% Tax rate is 40% Beta is 1.25

Q: Which of the following statements is CORRECT?   Group of answer choices   When calculating the cost…

A: Preferred stock Dividends are not liable to tax- Hence the option is not correct. An increase in…

Q: Which of the following would increase a company’s additional financing needed (AFN)? a) the…

A: AFN is used in context of business looking to expand. Additional funds needed are raised using notes…

Q: rn on total assets can improve its return on equity, all else remaining the same, but   A.…

A: Return on Equity (ROE) evaluates asset management, cost management, and debt management, a company…

Q: Why is it important to include the tax effect into cost of capital computations for firms with debt…

A: In case of debt financing company  Cost of debt we take for computation  of weighted average cost of…

Q: Kyma Inc. currently has zero debt. It is a zero growth company, and it has the data shown below. Now…

A: WACC is the overall average cost of the all sources of the finance. It is equal to the sum of…

Q: How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its…

A: WACC is computed as the sum of the after-tax cost of debt and cost of equity proportionate to their…

Q: FAMA is considering issuing new common stock and using the proceeds to reduce its outstanding debt.…

A: The Fama Corp. is Considering issuing Common stock which does not affect Total assets, Interest rate…

Q: How would each of the following scenarios affect a firm's cost of debt, r d (l - t), t=tax rate; its…

A: rd(1 - t) rS WACC Corporate tax rate is lowered I N I As tax rate is lowered cost of debt…

Q: Which of the following would occur

A: The mix of equity and debt in a business organization is known as the capital structure of the…

Q: If the present value of a firm's marginal financial distress costs are equal to the present value of…

A: Financial distress costs means the firm cannot pay its debt or firms have insufficient cashflow.…

Q: (i) If a company increased its share capital and reduced its long term debt, then gearing would: A.…

A: Gearing ratio :             The accounting ratio tells the proportion of the total debt of the…

Q: F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no…

A:

Q: Wintermelon Corp.'s controller is considering a change in the capital structure consisting of 40%…

A: Beta is the measure of stock’s volatility in relation to the overall market.

Q: Which of the following will increase the WACC for a tax-paying company? Decrease the proportion of…

A: WACC or the weighted average cost of capital implies for the cost incurred for raising the total…

Q: A firm wants to reduce its cash conversion cycle sharply.  Which of the following actions should it…

A: Cash conversion cycle is an important metric used in finance. Essentially this metric determines the…

Q: Jones Group has been generating stable after-tax return on equity (ROE) despite declining operating…

A: Return on equity (ROE) is a measure of financial performance of a company, it is calculated by…

Q: An increase in the corporate tax rate for company X will generally     Increase X's cost of equity…

A: Corporate tax rate is beneficial in the case of debt as it provides the tax shield, which reduces…

Q: F. Pierce Products Inc. is considering changing its capital structure. F. Pierce currently has no…

A: (i) Compute the cost of equity using CAPM formula             rs   =Rf + Beta*(Rm -Rf) rs =Cost of…

Q: does the WACC decrease as a com

A: Introduction : In simple words, Weighted average cost of capital or WACC is the sum of the cost of…

Q: cost of debt is determined by taking the present value of the interest payments and principal times…

A: Cost of capital refers to the rate of return which is required by the company in order to achieve…

Q: Although the exact relationship between a firm's degree of financial leverage and its beta is…

A: Beta is a measure of volatility or systematic risk higher the beta higher will be the risk. The beta…