Chapter 2, Problem 2.8E

Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Required: 1. Calculate the average common stockholders equity. 2. Calculate the return on stockholders equity.

CALCULATING THE WACC Here is the condensed 2019 balance sheet for Skye Computer Company (in thousands of dollars): Skyes earnings per share last year were 3.20. The common stock sells for 55.00. last years dividend (D0) was 2.10, and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 9%. Skyes preferred stock pays a dividend of 3.30 per share, and its preferred stock sells for 30.00 per share. The firms before-lax cost of debt is 10%, and its marginal tax rate is 25%. The firms currently outstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%, the risk-free rate is 6%, and Skyes beta is 1.516. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals 1.2 million. a. Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock, the cost of equity from retained earnings, and the cost of newly issued common stock. Use the DCF method to find the cost of common equity. b. Now calculate the cost of common equity from retained earnings, using the CAPM method. c. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between r1 and rs as determined by the DCF method, and add that differential to the CAPM value for rs.) d. If Skye continues to use the same market-value capital structure, what is the firms WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock?

i. Use the following simplified 2019 balance sheet to show, in general terms, how an improvement in one of the ratios—say, the DSO—would affect the stock price. For example, if the company could improve its collection procedures and thereby lower the DSO from 38.1 days to 27.8 days, how would that change “ripple through” the financial statements (shown in thousands below) and influence the stock price? Accounts receivable $ 402                                         Debt $ 965                              Other current assets 888 Net fixed assets 361 Equity 686.                        Total assets $1,651                  Total liabilities and equity $1,651 j. Although financial statement analysis can provide useful information about a company’s operations and its financial condition, this type of analysis does have some potential problems and limitations, and it must be used with care and judgment. What are some problems and limitations?

Brooks Sporting Inc. is prepared to report the following 2018 income statement(shown in thousands of dollars).   Prior to reporting this income statement, the company wants to determine its annual dividend.The company has 320,000 shares of common stock outstanding, and its stock tradesat $37 per share.a. The company had a 25% dividend payout ratio in 2017. If Brooks wants to maintainthis payout ratio in 2018, what will be its per-share dividend in 2018?b. If the company maintains this 25% payout ratio, what will be the current dividendyield on the company’s stock?c. The company reported net income of $1.35 million in 2017. Assume that the numberof shares outstanding has remained constant. What was the company’s per-share dividendin 2017?d. As an alternative to maintaining the same dividend payout ratio, Brooks is consideringmaintaining the same per-share dividend in 2018 that it paid in 2017. If it choosesthis policy, what will be the company’s dividend payout ratio in 2018?e. Assume…

Use your own words to answer the following questions: Write the formula for the P/E ratio and what it measures? Should you invest in a company with high P/E or low P/E? A company has the following items for the fiscal year 2020: Revenue = 10 million Net income = 4 million The company has 2 million shares of stock Stock price per share = $70 Calculate the company’s earnings per share and P/E ratio

At the beginning of 2020, Buck Corporation had assets of $540,000 and liabilities of $320,000. During the year, assets increased by $50,000 and liabilities decreased by $10,000. What was the total amount of stockholders' equity at the end of 2020? Group of answer choices $220,000 $280,000 $380,000 $500,000 none of the above is correct

The 2020 balance sheet of Osaka’s Tennis Shop, Incorporated, showed $590,000 in the common stock account and $4.8 million in the additional paid-in surplus account. The 2021 balance sheet showed $630,000 and $5.3 million in the same two accounts, respectively. If the company paid out $600,000 in cash dividends during 2021, what was the cash flow to stockholders for the year? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567.)

During the year, Blue Company had revenues of $240,000, expenses of $75,000, and stock issuances of $80,000. Dividends during the year were $8,000. If retained earnings at the beginning of the year was $90,000, what was retained earnings at the end of the year? Question options: $162,000 $247,000 $170,000 $327,000 Im pretty sure it is 247,000 but could I get an explanation of the answer?

Some balance sheet information is shown below: (all values in millions of dollars). a. What change in the book value of the company's equity took place at the end of 2018? b. Is the company's market-to-book ratio meaningful? Is its book debt-equity ratio meaningful? Explain. a. What change in the book value of the company's equity took place at the end of 2018? The book value of equity ▼ increased or decreased by $_____ billion from the end of the previous year, and was ▼ positive or negative. (Select from the drop-down menus and round to three decimal places.)