GEN CMB LL CORP FINC; CNCT
11th Edition
ISBN: 9781259724145
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 22QP
Summary Introduction
To determine: External financing needed
Introduction:
The fund acquired from the outside sources to support the
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Last year Jain Technologies had $260 million of sales and $104 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 60% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set?
a. 24.00%
b. 19.35%
c. 17.14%
d. 31.58%
e. 11.43%
A company wants to invest $619,932 today. The expected returns in years 1, 2, and 3 are $244,539, $175,421, and $341,884, respectively. If the rate of return on investment must be at least 15%, and the probability of commercial and technical success are 0.89 and 0.86, respectively. What is the maximum expenditure justified that the company may spend?
Last year Jain Technologies had $250 million of sales and $100 million of fixed assets, so its Fixed Assets/Sales ratio was 40%. However, its fixed assets were used at only 40% of capacity. Now the company is developing its financial forecast for the coming year. As part of that process, the company wants to set its target Fixed Assets/Sales ratio at the level, it would have had, had it been operating at full capacity. What target Fixed Assets/Sales ratio should the company set?
a.
19.0%
b.
14.6%
c.
16.0%
d.
15.4%
e.
14.2%
please type out all of your work
Chapter 3 Solutions
GEN CMB LL CORP FINC; CNCT
Ch. 3 - Financial Ratio Analysis A financial ratio by...Ch. 3 - Industry-Specific Ratios So-called same-store...Ch. 3 - Sales Forecast Why do you think most long-term...Ch. 3 - Sustainable Growth In the chapter, we used...Ch. 3 - EFN and Growth Rate Broslofski Co. maintains a...Ch. 3 - Common-Size Financials One tool of financial...Ch. 3 - Asset Utilization and EFN One of the implicit...Ch. 3 - Comparing ROE and ROA Both ROA and ROE measure...Ch. 3 - Ratio Analysis Consider the ratio EBITD/Assets....Ch. 3 - Return on Investment A ratio that is becoming more...
Ch. 3 - Use the following information to answer the next...Ch. 3 - Prob. 12CQCh. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - Use the following information to answer the next...Ch. 3 - DuPont Identity If Wilkinson, Inc., has an equity...Ch. 3 - Equity Multiplier and Return on Equity Synovec...Ch. 3 - Using the DuPont Identity Y3K, Inc., has sales of...Ch. 3 - EFN The most recent financial statements for...Ch. 3 - Sales and Growth The most recent financial...Ch. 3 - Sustainable Growth If the Hunter Corp. has a ROE...Ch. 3 - Sustainable Growth Assuming the following ratios...Ch. 3 - Calculating EFN The most recent financial...Ch. 3 - External Funds Needed Dahlia Colby, CFO of...Ch. 3 - Sustainable Growth Rate The Wintergrass Company...Ch. 3 - Return on Equity Firm A and Firm B have debt-total...Ch. 3 - Ratios and Foreign Companies Prince Albert Canning...Ch. 3 - External Funds Needed The Optical Scam Company has...Ch. 3 - Days Sales in Receivables A company has net income...Ch. 3 - Ratios and Fixed Assets The Whisenhunt Company has...Ch. 3 - Calculating the Cash Coverage Ratio Panda Inc.s...Ch. 3 - Prob. 17QPCh. 3 - Prob. 18QPCh. 3 - Prob. 19QPCh. 3 - Fixed Assets and Capacity Usage For the company in...Ch. 3 - Calculating EFN The most recent financial...Ch. 3 - Prob. 22QPCh. 3 - Prob. 23QPCh. 3 - EFN and Internal Growth Redo Problem 21 using sale...Ch. 3 - Prob. 25QPCh. 3 - Prob. 26QPCh. 3 - Prob. 27QPCh. 3 - Sustainable Growth Rate Based on the results in...Ch. 3 - Prob. 29QPCh. 3 - Prob. 30QPCh. 3 - Prob. 1MCCh. 3 - Prob. 2MCCh. 3 - Prob. 3MCCh. 3 - Prob. 4MCCh. 3 - Prob. 5MC
Knowledge Booster
Similar questions
- Jasmine Manufacturing wishes to maintain a sustainable growth rate of 9.25 percent a year, a debt-equity ratio of .50, and a dividend payout ratio of 27.5 percent. The ratio of total assets to sales is constant at 1.25. What profit margin must the firm achieve in order to meet its growth rate goal?arrow_forwardSuppose that current assets, costs, and accounts payable maintain a constant ratio to sales. The firm retains 40% of earnings. If the firm is producing at only 90% capacity, what is the total external financing needed if sales increase 25%?arrow_forwardJasmine Manufacturing wishes to maintain a sustainable growth rate of 10.25 percent a year, a debt-equity ratio of .46, and a dividend payout ratio of 29.5 percent. The ratio of total assets to sales is constant at 1.29. What profit margin must the firm achieve?arrow_forward
- 11 If sales increase from P80,000 per year to P140,000 per year, and if the operating leverage factor is 5, then net operating income should increase by: Group of answer choices 375% 167% 334% 250% 150% 875% 188%arrow_forwardThe Hydride Division of Murdoch Corporation is an investment center. It has $1,000,000 of operating assets. During 2015, the Hydride Division earned operating income of $400,000 on $6,000,000 of sales. Murdoch's companywide return on investment or desired rate of return is approximately 10%. a. What is the ROI? b. What is the margin? c. What is the turnover? d. What is the residual income?arrow_forwardAn industrial firm with assets of $100 million is exploring the benefit of leveraging the balance sheet given expectations of economic growth. Currently, the firm is earning a return on assets of 9.00%, a return on equity of 15.00%, retains a debt ratio of 40% (equity to assets of 60%). The board of directors has requested management consider changing the debt ratio to 60% (equity to assets of 40%). The new debt will cost 4.00% given a credit rating downgrade. The firm will apply the proceeds of new debt to repurchase stock at book value. The firm is taxed @ 20% but expects that rate to rise in the future. First, estimate how the change in capital structure will impact pro forma net income, return on assets, and return on equity. Second, briefly indicate the advantages and risks of relying on additional debt to leverage the balance sheet.arrow_forward
- Quick Grow is in an expanding market , and its sales are increasing by 25% per year. Would the net working capital to be increasing or decreasing, explain why?arrow_forward1. Austin Electronics expects sales next year to be $900,000 if the economy is strong, $650,000 if the economy is steady, and $375,000 if the economy is weak. The firm believes there is a 15 percent probability the economy will be strong, a 60 percent probability of a steady economy, and a 25 percent probabil- ity of a weak economy. What is the expected level of sales for next year?arrow_forwardFINANCIAL FORECASTING Sue Wilson, the new financial manager of New World Chemicals (NWC), aCalifornia producer of specialized chemicals for use in fruit orchards, must prepare a formal financial forecastfor 2017. NWC’s 2016 sales were $2 billion, and the marketing department is forecasting a 25% increase for2017. Wilson thinks the company was operating at full capacity in 2016, but she is not sure. The first step inher forecast was to assume that key ratios would remain unchanged and that it would be “business as usual”at NWC. The 2016 financial statements, the 2017 initial forecast, and a ratio analysis for 2016 and the 2017initial forecast are given in Table IC 16.1.Assume that you were recently hired as Wilson’s assistant and that your first major task is to help herdevelop the formal financial forecast. She asks you to begin by answering the following questions.a. Assume (1) that NWC was operating at full capacity in 2016 with respect to all assets, (2) that all assetsmust grow at…arrow_forward
- Tinsley, Incorporated, wishes to maintain a growth rate of 17 percent per year and a debt-equity ratio of 1.1. The profit margin is 4.4 percent, and total asset turnover is constant at 1.04. What is the dividend payout ratio? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the maximum sustainable growth rate for this company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.arrow_forwardIf sales increase from P80.000 per year to P140,000 per year, and if the operating leverage factor is 5, then net operating income should increase by:arrow_forwardWhat proportion of earnings is being plowed back into the firm if the sustainable growth rate is 8% and the firm's ROE is 20%?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Financial Reporting, Financial Statement Analysis...FinanceISBN:9781285190907Author:James M. Wahlen, Stephen P. Baginski, Mark BradshawPublisher:Cengage Learning
Financial Reporting, Financial Statement Analysis...
Finance
ISBN:9781285190907
Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Publisher:Cengage Learning