What are some factors that influence: (1) a firm’sreceivables level and (2) the dollar cost of carryingreceivables?

Q: explain the concept of cost of capital and how would you determine the WACC of the firm.

A: Cost of capital refers to the cost incurred in availing the source of finance. Cost of capital is…

Q: What is the risk-return tradeoff that arises when . firm manages its working capital? Give tangible…

A: Financial risk is referred as the possibility or chance of losing the investment, basically an…

Q: what is financial leverage and its implications for company performance?

A: Company borrow amounts to buy assets and do business.

Q: How does sales stability affect the target capital structure?

A: Target capital structure: Target capital structure is defined as the combination of debt, preferred…

Q: The financial leverage implications for company performance?

A: Financial Leverage means the inclusion of debt in the company's capital structure. Debt is used to…

Q: Are debtors calculated at selling price or finished goods price for net working capital? and why?

A: Net working capital means the difference between the current assets and current liabilities. Current…

Q: Explain the effect of issuance cost on firm value.

A: There are issues cost associated with debt and equity that has impact on  value of firm.

Q: __________ is the cost of available funds for a company, which acts as a hurdle rate that the…

A: Cost of capital is also known as weighted average cost of capital

Q: In calculation of weighted average cost of capital, is trades payable included?

A: Trade payable- Amount that is payable by a firm  for goods purchased or services availed and it…

Q: How can the components of working capital affect the cash position of a firm?

A: The question is based on the concept of working capital and effect of change in working capital on…

Q: Why do firms need to calculate cost of financing using weights?

A: Financing refers to the management of large amount of money. It is a process of providing or raising…

Q: Distinguish between the company cost of capital and project cost of capital?

A: Answer: Differences between project cost of capital and company’s cost of capital: Project cost of…

Q: Explain what is the Weighted Average Cost of Capital (WACC) and why is it important for a company…

A: Weighted average cost of capital is the rate at which a company is expected to pay for its…

Q: What is the difference of Cost of Equity and the required rate of return on equities?

A: The amount of money that would be transferred to a company's shareholders if all of the company's…

Q: Why are market-based weights used instead of book-value-based weights when computing the weighted…

A: Market value is that present worth of the firm or any resource in the market on which it tends to be…

Q: How is the weight in the weighted average cost of capital calculated

A: WACC = (Weight of Common stock * Cost of common stock) + (Weight of preferred stock * Cost of…

Q: Describe the role that the mix of variable versus fixed costs has in the variation of earnings…

A: EBIT or earnings before interest and taxes is the company's net income before deducting the income…

Q: What is the most fundamental factor in engineering economy? a. Compound amount factor b.…

A: Engineering economics is referred to as the subset of economy, which used to be concerned along with…

Q: Discuss some financial variables that affect the price-earnings ratio?

A: The price-Earning Ratio refers to the ratio between earning per share and the current market price…

Q: The weights used in calculating the weighted average cost of capital should be based on ___

A: The Answer:

Q: Comparing working capital of service and manufacturing or retail firms, which one has more cash and…

A: Working capital termed as the cash required for conducting the business i.e. purchase of raw…

Q: What is the weighted average cost of capital?

A: The formula to compute weighted average cost of capital as follows:

Q: Does weighted average cost of capital is similar to Cost of Capital?

A: Cost of capital refers to the return expected by the company for making investments in projects or…

Q: How does the cost system affect the financial position of the firm?

A: Cost system is the system which is designed to evaluate the monitor the cost incurred by the…

Q: What is the difference between the Company cost of capital and  project cost of capital?

A: Cost of capital of a company is also called as weighted average cost of capital.  It considers the…

Q: Explain the relationship between the weighted average cost of capital (WACC), the maximization of…

A: Optimal capital structure of the firm explains the relationship between the weighted average cost of…

Q: What is the nominal return associated with an investment in capital, and why?

A: Nominal Return is the amount of money generated by an investment.

Q: What is one classification scheme that firms often use to obtain risk-adjusted costsof capital?

A: The question is based on the concept of risk-adjusted costs of capital with consideration of…

Q: In light of the cost of capital, one area for managers to control is through working capital…

A: Working capital management is a business strategy designed to ensure that a company operates…

Q: Describe the method of determining the Company Cost of Capital?

A: Firms often operate their company using the capital generated from different sources. That involves…

Q: How does company’s investment in receivables is influenced by several variables? What are the…

A: Receivables: Receivables refer to an amount to be received in future. General classifications of…

Q: Demand, Competitions and distribution chain are factors relating to: a. Internal Factors b.…

A: There are various factors in the environment of a business that influences and impacts the…

Q: What is a company’s cost structure? How can cost structure affect a company’s profits?

A: Company's cost structure expresses the proportion of fixed costs to variable cost. Cost structure…

Q: What is the cost constraint, and how does it affect financial reporting?

A: Under financial accounting, constraints are referred to as boundaries or guidelines prescribed in…

Q: How does the firm’s internal condition affect its actual capital structure?

A: The capital structure is the structure of mix of debt and equity which shows how a company has…

Q: The ratio sales to working capital is a measure of

A: Working capital turnover  ratio is a measure to determine how efficiently a Company's working…

Q: What is the a required return for this company?

A: Information Provided: Beta = 1.90 Risk-free rate = 10% Expected market return = 20%

Q: capital

A: Capital budgeting is estimating the level of the firm's profitability on its future projects. Future…

Q: What Is the term Actual-Dollar Analysis?

A: Dollar analysis is referred as the analysis of dollars by businesses and companies to compare the…

Q: What is the risk-return tradeoff that arises when a firm manages its working capital? Give tangible…

A: Risk is referred as the probability or chance, which has an outcome or actual gains of an…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.