Which of the following is NOT a Financial objective? a. Growth in earnings b. A bigger market share C. Higher returns on invested capital d. Stable earnings during periods of recession
Q: Assume that each of the following changes is independent (i.e., except for this change, all other…
A: The earning for the shareholders is an important element that induces them to invest the capital in…
Q: Investors can form earnings growth expectations from various sources, including ___
A: Investors can form earnings growth expectations from currant earnings and retention rates. Growth…
Q: risk implications of improving net profit margin to increase Return on Equity?
A: Net profit margin is the percentage of net profit to sales revenue
Q: Which of the following are false? I) Managers are reluctant to make dividend changes that might have…
A: As per Lintner’s stylized facts, Managers are reluctant to make the dividend changes that might have…
Q: Which TWO of the following are possible effects of rising prices upon financial statements?…
A: We have the following question: Which TWO of the following are possible effects of rising prices…
Q: Which of the following statements is not correct? The higher the sales growth rate g is, the…
A: Additional fund needed is the amount of money a company needs to raise from its external sources to…
Q: Which of the following decision criteria is the easiest to use and very popular among investors?…
A: The capital budgeting process uses different methods to analyze the projects. Each method has…
Q: If a sales increase is forecasted, how will it affect expenses on the pro forma income statement if…
A: Pro forma income statement is a financial statement which is projected and shows predicted future…
Q: Except for one of the following the constant dividend growth model is useful to corporate managers…
A: The Constant growth in dividends model used to find out the intrinsic value of the company
Q: Why would an analyst prepare a common-sized balance sheet?
A: Balance Sheet: It is one of the financial statements which shows the firm's liabilities, equity, and…
Q: If a firm wishes to retain the same return on equity when its net profit margin and total asset…
A: Net profit margin is given by profit divided by sales.So decline indicates that net income is…
Q: A trend analysis indicates a firm's performance ____. a.over time b.more accurately than any…
A: A technical analysis methodology that aims to forecast future stock price movements using trend data…
Q: The future earnings are likely to withstand an economic downturn,is situation of? A. defensive…
A: defensive companies and stock : Are the companies whose sales remain stable during both economic…
Q: State if each of the following would increase or decrease AFN. A high growth rate. A low…
A: Additional Funds Needed (AFN) is that the amount of cash raised by a corporation to expand its…
Q: Which of the following situation in which the quality of the company’s pay-out to shareholders may…
A: A dividend is an amount that is paid to the shareholders on their investment. It is declared out of…
Q: “When the stock market declines the net worth of companies decreases, causing the problem of…
A: Asymmetric information exists in every transaction when one party possesses knowledge that the other…
Q: How does a deterioration in balance sheets of financialinstitutions and the simultaneous failures of…
A:
Q: What is the effect of an increase in the cost of capital on the payback period, profitability index…
A: The correct answer in the given question is: Payback period will not change, Profitability will…
Q: The use of financial leverage by the firm has a potential impact on which of the following?…
A: Financial leverage refers to the use of debt capital in the capital structure of the company. The…
Q: one of the following is true regarding the business and financial risk: Select one: a. the business…
A: Business risk refers to that type of risk which involves the decline in profitability and stability…
Q: If the cost of borrowing is lower than the operating return .. business by increasing borrowing in…
A: The business is financed by equity as well as debt. The ROE is increased if the company has started…
Q: Which of the following statements is correct? a. An increase in a firm’s inventories will call for…
A: Financial ratio is referred to as the relative magnitude for the two selected numerical values,…
Q: How does the constant–growth model influence financial decisions regarding risk and return?
A: The constant growth model, or Gordon Growth Model, is a method of esteeming stock. It expects that…
Q: Under what situation will return on equity be higher than return on investment? a. When assets…
A: (a) When assets exceed liabilities:Suppose assets is $ 70,000 and liabilities is $ 50,000 and net…
Q: a. How does the return on total assets differ from the return on stockholders’ equity?b. Which ratio…
A: a. When return on total assets is considered, interest expense is added to the net income and…
Q: Q.The probability of financial distress a- Increases when the firm's debt to value ratio increases…
A: Financial Distress: The condition which arises due to incapacity of the company to generate enough…
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: Which one of the following statements concerning financial leverage is correct? A) Financial…
A: Financial leverage which is also known as leverage or trading on equity
Q: ts experienced during the last decade? Have they been perceived as positive or negative chan
A: Step 1 A financial market is a type of market in which securities are traded, such as an exit…
Q: In estimating continuing value, how does assuming that RONIC is equal to WACC affect the importance…
A: .Continuing value is the present value of the cash flow when we assume that the growth rate will be…
Q: Which one of the following is an advantage of LIFO? a. In periods of rising prices, less income…
A: >> LIFO Method means Last in first out i.e latest purchase is sold first. >> In rising…
Q: Which of the following is NOT a conclusion drawn from M&M's Propositions 1 and 2? a. Shareholder's…
A: M&M proposition states the value of company is calculated at present value of its future…
Q: When examining tax, the optimal debt level is proportional to its current earnings. D. The…
A: Managers choose internal finance over outside sources. The weighted average cost of capital, risk…
Q: Which of the following statements is correct? A. If assets and spontaneously generated liabilities…
A: Additional funds needed (AFN) / External financing needed (EFN) is the amount of money a company…
Q: Which one of the followings is incorrect regarding to cost of equity: On average, it is higher…
A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…
Q: The internal rate of return (IRR) can best be described as: A. the discount rate at which a set of…
A: It is one of capital budgeting discounting techniques which is used as a metric in financial…
Q: The market-to-book ratio is the ratio of a firm that reports negative retained earnings on its…
A: The market-to-book ratio is also called as Price-to-Book ratio. This ratio is determined to…
Q: Which of the following statements is true? OA. Profit margin is calculated by dividing total assets…
A: The accounting is a process to classify the financial transactions, record in journal and prepare…
Q: Intermediaries can reduce positive income (maturity) gaps by. _the proportions of their liabilities…
A: The assets whose market price is vulnerable to the interest rate changes are called…
Q: An increase in a firm's inclination to pay dividends may be because of a decline in profitable…
A: Dividends are paid by the company to their shareholders as a share of the profits.
Q: Which of the following statements accurately describes the relationship between earnings and…
A: Growth rate in earnings and dividend = ROE*Retention ratio or ROE*(1-Payout ratio) Growth rate…
Q: Which of these would best improve a firm's liquidity position? * a. Lower profitability b. Higher…
A: The following is a summary of the risk-return syndrome: When liquidity rises, the chance of…
Q: Which of the following statements regarding the PE ratio is true? A high PE ratio is indicative of a…
A: The Price Earnings Ratio (PE Ratio) is the ratio of the market price of a share to its earnings. In…
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- Which of the following statements is correct? A. If assets and spontaneously generated liabilities are not projected to grow at the same rate as sales, then the AFN method will provide more accurate forecasts than the projected financial statement method. B. Dividends are paid with cash taken from the accumulated retained earnings account, hence dividend policy does not affect the AFN forecast. C. A negative AFN indicates that retained earnings and spontaneous capital are far more than sufficient to finance the additional assets needed. D. AFN is defined as the funds that a firm must raise internally. E. The AFN equation for forecasting funds requirements requires only a forecast of the firm’s balance sheet. Although a forecasted income statement may help clarify the results, income statement data are not essential because funds needed relate only to the balance sheet.Which of the following statements are false? Select all that apply a. Liquidity ratios are used to measure the speed with which various accounts are converted into sales. b. When ratios of different years are being compared, inflation should be taken into consideration c. Return on total assets (ROA) is sometimes called return on investment d. Generally, inventory is concerned with the most liquid asset that a firm possesses. e. A P/E ratio of 20 indicates that investors are willing to pay $20 for each $1 of earnings.Assume that each of the following changes is independent (i.e., except for this change, all other factors remain unchanged). In each case. indicate what will happen to the earnings muitiplier and explain why. a. The return on equity increases. b. The debt-equity ratio declines . Overall productivity of capital increases d. The dividend payout ratio declines
- Which of the following statements is correct? A. If a firm’s assets are growing at a positive rate, but its retained earnings are not increasing, then it would be impossible for the firm’s AFN to be negative. B. AFN is not always positive. C. If a firm increases its dividend payout ratio in anticipation of higher earnings, but sales and earnings actually decrease, then the firm’s actual AFN must, mathematically, exceed the previously calculated AFN. D. Higher sales usually require higher asset levels, and this leads to what we call AFN. However, the AFN will be zero if the firm chooses to retain all of its profits, i.e., to have a zero dividend payout ratio. E. Dividend policy does not affect the requirement for external funds based on the AFN equation.Under what situation will return on equity be higher than return on investment? a. When assets exceed liabilities. b. When the debt to equity ratio is greater than 1.0. c. When net income is higher than it was in the previous year. d. When a company earns more on borrowed money than the interest it must pay.Q.The probability of financial distress a- Increases when the firm's debt to value ratio increases b- decreases when the firm's debt to value ratio increase c- Increases when the volatility in the firm's operating cash flows increase. d- Both A and C
- 1. What is an investor’s objective in financial statement analysis? a. To determine if the firm is risky b. To determine the stability of earnings. c. To determine changes necessary to improve future performance d. To determine whether or not an investment is warranted by estimating a company’s future earnings stream 2. The current ratio isa. calculated by dividing current liabilities by current assets. b. used to evaluate a company's liquidity and short-term debt paying ability c. used to evaluate a company's solvency and long-term debt paying ability. d. calculated by subtracting current liabilities from current assets.A firm with a substandard return on total assets can improve its return on equity, all else remaining the same, but A. decreasing its total asset turnover. B. increasing its total asset turnover. C. increasing its debt ratio. D. decreasing its debt ratio.Which of the following situation in which the quality of the company’s pay-out to shareholders may decline a. Decrease in cash position b. Increase in positive NPV investment opportunities c. Increase in capital gains tax d. Decrease in marginal tax rate on dividends Which of the following concepts tells us that dividends are to be paid only when the capital budget has been already supplied? a. Gordon Growth model b. Dividend irrelevance theory c. Retain Earnings break-point principle d. Residual Dividend Model
- Which of these would best improve a firm's liquidity position? *a. Lower profitabilityb. Higher capital spendingc. Higher need for noncash current assets on the balance sheetd. Declaration of stock dividendsWhich of the following statements is FALSE? Question content area bottom Part 1 A. Growth rate of the firm is higher, it is more optimal to have a higher level of debt relative to equity in the firm capital structure. B. Growth will affect the optimal leverage ratio even if the firm has positive earnings. C. When examining tax, the optimal debt level is proportional to its current earnings. D. The more unsure we are of EBIT the more chance that interest will exceed EBIT, if the interest expense is highWhich of the following statements is false? a. A firm’s return on equity exceeds its return on investment under conditions of favorable leverage. b. A common-size balance sheet states each asset, liability and shareholder’s equity account as a percentage of total assets. c. Common-size statements are used to evaluate trends and to make industry comparisons. d. Creditors tend to favor a firm with high financial leverage.