Explain what is financial ratio analysis?

Q: It is now January 1, 2022, and you are considering the purchase of an outstanding bond that was…

A: Bonds are those financial instruments that have fixed income and which also help a company to raise…

Q: Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow.…

A: Ratio Analysis is the financial analysis technique to analyse the company's financial position. It…

Q: Silahis Trading made investments in non-trading equity securities. The cumulative “Holding Gain or…

A: Answer -    Calculation of amount required to debit to other comprehensive income account at the end…

Q: Two companies, X and Y have issued 30 day commercial papers in the money market. Company X’s…

A: Bond valuation involves five components – coupon rate, yield, present value, future value and time…

Q: Use the information below provided by Angel Baby Angel Company: Sales     8,250,000.00 Operating…

A: Data given: Net operating profit =$ 3,525,000.00 Tax rate = 40% Interest expense=$ 1,750,000.00 WACC…

Q: If both deals fail, then A will have a more negative return than B.

A: Merger arbitrage refers to the business in which stocks are traded by the companies which are…

Q: The Company provided the following financial information: Assets 7,250,800.00 Tax rate 35% BEP 14%…

A: Times Interest Earned  ratio is calculated using the following formula: Times Interest…

Q: erging with Target Corporation. Equity values were gathered as follows: ABC, separate equity value =…

A: Intrinsic value of merged entity depends on net income of the merged entity and required rate of…

Q: Interest expense should be calculated based on interest rates and debt balances and by using a trend…

A: Interest expense is the amount paid periodically on the borrowed amount. The borrowed amount can be…

Q: A finding that _______________would provide evidence AGAINST the semi-strong form of the EMT. Group…

A: The Efficient Market Theory (EMT) is a hypothesis that states that stock prices reflect all…

Q: Compute the value of Murphy’s Moving Company bonds if investors' required rate of return is 4.5%.

A: The value of the bond is the current price of the bond. It is the present value of the bond's coupon…

Q: A firm must decide between two silicon layer chip designs from Intel. Their effective income tax…

A: With reference to capital budgeting, while evaluating the mutually exclusive project, the net…

Q: Suppose you sold stock XYZ December RM8 call options for40 sen. The price of XYZ stock on the day of…

A: Call options can be defined as the trading strategy which gives the right to purchase the underlying…

Q: Therefore, the annual coupon payment is

A: Annual coupon payment = Face value * Annual coupon rate

Q: How much money should a grandparent deposit in a college savings fund today for their newborn…

A: Future value refers to the value that an amount would assume at a future time period after…

Q: Assume you buy a March RM1625 FBM-KLCI call option for RM25  and hold until expiry. What will be…

A: In the given case, Call option is purchased at a premium of $25 Long call is exercised only if Stock…

Q: What is the value of a bond that matures in 12 years, makes an annual coupon payment of $50, and has…

A: The value of the bond is the current price of the bond. It is the present value of the cash flows…

Q: At the end of 2016, Susan had saved 65 000 € for her retirement. She plans to withdraw at the end of…

A: In order to calculate the periodic payment of an annuity, we are required to use the PMT function of…

Q: ABC Corp. agreed with the bank a P5,000,000 loan to be credited to ABC on May 1, 2022. The…

A: Forward rate agreement is an instrument used to hedge interest rate risk. FRA sets interest rate and…

Q: For example, you are a portfolio manager, and you get to select your pick of clients (individual or…

A: As a portfolio manager, the pick would be individual investor and sub class would be HNWIs. HNWIs or…

Q: Saki Sushi Restaurant has 250,000 shares of stock outstanding, $400,000 in perpetual after-tax EBIT,…

A: Number of shares = 250,000 Initial project cost = $360,000 Annual perpetual after tax EBIT = $60,000…

Q: college student wants to celebrate graduating and getting a job by spending $5,000 on a trip to Bali…

A: First we need to calculate annual Installments to be paid Solved using Financial Calculator  N = 5…

Q: ment by using

A: The benefit cost ratio is calculated by :    Present value of net benefits or cashinflows  Prsent…

Q: Suppose Lion Cage Multinational floated 5000 bonds on January 1, 2020 with a par value of 1500 at…

A: Bond valuation involves five components – coupon rate, yield, present value, future value and time…

Q: Mary bought a bike payable monthly for 10 months starting at the end of the month. How much is the…

A: Mortgage is a loan to buy an asset. The cost of the asset will be paid in equal instalments of…

Q: 22. Mr. and Mrs. Ramirez have 4 children and have decided that they need a bigger house. They intend…

A: Loan Payments: These represent payments made by the borrower to the lender for taking a loan. Such…

Q: 4) Jones purchased a perpetuity today for 7000. He will receive the first annual payment of 200 five…

A: Price of perpetuity = Present value of perpetuity = 7000 First payment after 5 years = 200 Every…

Q: 3. Calculate the NPV at a cost of capital of 9% and the IRR for a project with an initial outlay of…

A: Net Present Value is the difference between present value of cash inflows and cash outflows.…

Q: Use the information below provided by Angel Baby Angel Company: Sales     8,250,000.00 Operating…

A: Operating income = 3,525,000 Tax rate = 40% WACC = 8% Capital invested = 24,875,000

Q: Blue Cod, Inc., a private firm in the holiday gift industry, is considering a new project. The…

A: Net present value of the project can be calculated by subtracting the present value of cash inflows…

Q: Apple has 200 shares outstanding. It earns $2,000 per year and expects to pay all of it as…

A: Per year earning = $2,000 Number of shares = 200 Required rate of return = 0.05

Q: Automatic dividend reinvestment O is a requirement of all mutual fund companies. O compounds share…

A: Automatic dividend reinvestment is the process where the dividends earned are not paid out but…

Q: - Three years ago you bought a home for $150,000 using a fully amortizing loan with a 5% down…

A: Here, Cost of Home is $150,000 Down Payment is 5% Interest Rate is 4.5% Term of Loan is 30 years…

Q: ds, year-end rate

A: A merger occurs when two separate entities combine hands to create a new, united entity.The…

Q: 1.Suppose that a client borrows a loan amount of R50,000 at annual interest rate of 10% compounded…

A: Given Information  Amount of loan = R50,000 Annual interest rate = 10% Interest rate is compounded…

Q: YOU ARE SAVING FOR A NEW HOUSE AND YOU PUT $1,000 PER YEAR IN AN ACCOUNT PAYING 25% COMPOUNDED…

A: Annual deposit = $1,000 Interest rate = 0.25 (i.e. 25%) Period = 3 years Amount we will have at the…

Q: You have a portfolio consisting solely of Stock A and Stock B. The portfolio has an expected return…

A: A portfolio is made up of more than one stock. The weight of stocks that make the portfolio adds up…

Q: Olfert Inc. is repaying a loan of $57500 by making payments of $4250 at the end of every six months…

A: Loan repayments in equal instalments at equal intervals of time is called an annuity. Initial…

Q: Assume BBB stock price is currently $20. In each six-month period, it will either fall by 50 percent…

A: Options are derivative contracts. That is, the value of options is derived from the value of an…

Q: Without an abandonment option, a project is worth $15 million today. Suppose the value of the…

A: The process by which a corporation evaluates potential big projects or investments is known as…

Q: 5. Which of the following is/are financial intermediaries? 1 Banks 2 Stock Exchange 3 Credit Unions…

A: Answer -   Part 5 -  Correct Option is Option D - 1,2 and 3 Financial Intermediaries - Financial…

Q: You deposit $300 each month into an account earning 3% interest compounded monthly. a) How much will…

A: Monthly deposit (P) = $300 Interest rate = 3% Monthly interest rate (r) = 3%/12 = 0.25% Period = 15…

Q: 22. Mr. and Mrs. Ramirez have 4 children and have decided that they need a bigger house. They intend…

A: Principal (P) = $289000 r = 6% per annum = 0.5% monthly n = 25 years = 300 months Let M = Monthly…

Q: Assume you have a brand new nephew in the family and you want to contribute to the child's college…

A: A bond is a debt instrument that is used to raise capital. It differs from loans as they can be…

Q: Why is it important to keep those business receipt/record

A: Any business in any form or in any industry that is doing commerce or trade will have receipts and…

Q: Torpedo Co. is considering a new project generating an annual cash revenue of $500,000 in…

A: Time value of money (TVM) refers to the method used to measure the amount of money at different…

Q: On average, how much “free” trade credit does the firm receive during the year?

A: Per credit cycle purchase = purchases *time =450000*60/365 =P 73972.60

Q: Use the sinking fund formula shown to the right to determine the monthly payment needed to…

A: As per the given formula A(r/n) = 340,000(5%/12) =340,000(0.0041667) =1416.667   [(1+(r/n))n*t ] - 1…

Q: A bond with a coupon rate of 10 percent sells at a yield to maturity of 12 percent. If the bond…

A: Macaulay duration = Sum of weighted present values of cash flows from the bond/Price of bond…

Q: The level of detail in a model should not depend on the application. For example, for regular work…

A: Financial models are used to forecast financial statements. Financial models are build to help the…