For each of the companies described here, would you expect it to have a low, medium, or high dividend-payout ratio? Explain why. d. A dividend-paying company that experiences an unexpected drop in earnings from an upward-sloping trend line e. A company with volatile earnings and high business risk
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For each of the companies described here, would you expect it to have a low, medium, or high dividend-payout ratio? Explain why.
d. A dividend-paying company that experiences an unexpected drop in earnings from an upward-sloping trend line
e. A company with volatile earnings and high business risk
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- For each of the companies described here, would you expect it to have a low, medium, or high dividend-payout ratio? Explain why. a. A company with a large proportion of inside ownership, all of whom are high-income individuals b. A growth company with an abundance of good investment opportunities c. A company that has high liquidity and much unused borrowing capacity and is experiencing ordinary growth d. A dividend-paying company that experiences an unexpected drop in earnings from an upward-sloping trend line e. A company with volatile earnings and high business riskFor each of the companies described here, would you expect it to have a low, medium, or high dividend-payout ratio? 4. A company with volatile earnings and high business risk? A. Low dividend-payout ratio B. Medium or high dividend-payout ratio.Which of the following typically is true for profitability ratios? a. Growth stocks have lower price to earnings ratios.b. Companies in more competitive industries have higher profit margins.c. The gross profit ratio declines as competition increases.d. When a company has debt, its return on equity will be lower than its return on assets.
- Which of the following events would cause a company's cost of retained earnings to increase? Group of answer choices the company's stock price falls the company's forecasted growth in profits and dividends is reduced the company diversifies into a safer industry the overall beta for a company fallsA company whose stock is selling at a P/E ratio greater than the P/E ratio of a market index most likely has A. an anticipated earnings growth rate which is less than that of the average firm. B. a dividend yield which is less than that of the average firm. C. less predictable earnings growth than that of the average firm. D. greater cyclicality of earnings growth than that of the average firm.Except for one of the following the constant dividend growth model is useful to corporate managers because: a. the required rate of return of shareholders is related to the company's level of risk as perceived by investors. b. the dividend stream is influenced by earnings and profitability as well as the dividend policy of management c. the growth rate is related to the efficiency of the company in generating returns on equity d. inflation calculations are incorporated in the model
- Why would a company choose to have a low dividend payout ratio? A.The company has many investment opportunities with high growth potential B.The company has few investment opportunities and they have low growth potential C.The company has very low profits D.The company has very high profits E.The board of directors has decided to do so. B,C only A,C,Eonly B,D,Eonly B,C,Eonly A, C, DonlyWhich of the following would be a viable way to earn abnormally high trading profits if markets are semistrong-form efficient?a. Buy shares in companies with low P/E ratios.b. Buy shares in companies with recent above-average price changes.c. Buy shares in companies with recent below-average price changes.d. Buy shares in companies for which you have advance knowledge of an improvement in the management team.Which of the following statements is most correct?(a) A decline in the inventory turnover ratio suggests that the firm's liquidity position is improving.{b) The profit margin on sales is calculated by dividing net operating income by sales(c) When a corporation buys back its own stock, this is called Treasury Stock. The firm's cash and equity are both reduced.(d) None of the above.
- 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. Some resort to earnings management practices to artificially create desired results. Required: Is earnings management always intended to produce higher income? Explain.Companies often are under pressure to meet or beat Wall Street earnings projections in order to increase stockprices and also to increase the value of stock options. Some resort to earnings management practices to artificiallycreate desired results.Required:Is earnings management always intended to produce higher income? Explain.Companies often voluntarily provide non-GAAP earnings when they announce annual or quarterly earnings.Required:1. What is meant by the term non-GAAP earnings in this context?Which one of the followings is incorrect regarding to cost of equity: On average, it is higher than cost of debt. It moves in the same direction with tax rates. It is affected by return on market portfolio. For a dividend paying company, it is sensitive to growth expectations for future dividends. It is highly dependent on risk level of the firm and growth rate. For calculating cost of equity, we can rely on dividend growth model or SML approach. Both models might suffer from the assumption that past is a good predictor of future. True False Percy's Wholesale Supply has earnings before interest and taxes of €106,000. Both the book and the market value of debt is €170,000. The unlevered cost of equity is 15.5 per cent while the pre-tax cost of debt is 8.6 per cent. The tax rate is 28 per cent. What is the firm's weighted average cost of capital? Show your steps.
