EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Chapter 4, Problem 8P
a)
Summary Introduction
To determine: Additional financing needed for 2017.
b)
Summary Introduction
To determine: Additional financing needed for 2017.
c)
Summary Introduction
To determine: Additional financing needed for 2017.
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The data table shows financial statement data and stock price data for Mydeco Corp. Suppose Mydeco had purchased additional equipment for $11.7 million at the end of 2016, and this equipment was depreciated by $3.9 million per year in 2017, 2018, and 2019. Given Mydeco‘s tax rate of 35%, what impact would this additional purchase have had on Mydecco’s net income in years 2016-2019? Assume that the equipment is paid for out of cash and that Mydeco earns no interest on its cash balances.
In the table, calculate the new net income below.
**round to one decimal place**
Dart Corporation’s leverage ratio increased from 2.5 in 2017 to 3.0 in 2018. Without lookingat the financial statements, which statement best describes what may have occurred?a. The company incurred new equity financing in 2018, but it may or may not have beenmore profitable.b. The company incurred new debt financing in 2018, making it more profitable.c. The company incurred new debt financing in 2018, but it may or may not have beenmore profitable.d. The company incurred new equity financing in 2018, making it less profitable.
based on the ratio analysis below will the company be successful after taking a 500.0 mil loan to regain the lead in the construction market and to expand its business to the sale of heavy equipment?
or should the company sought other forms of financing?
Analysis of Financial Data (Table with ratios)
Ratio Analysis
2021
Est.
2020
2019
Industry Average
Liquidity Ratios
Current Ratio (times)
2.34
3.22
3.68
4.2
Quick Ratio (times)
0.91
1.24
1.79
2.1
Asset Management Ratios
Average sales/day
10.96
8.22
7.81
9
Inventory Turnover Ratio (times)
6.08
5.83
5.06
9
Days Sales Outstanding (days)
38.32
45.62
40.34
36
Fixed Assets Turnover Ratio (times)
2.12
2.52
3.27
3
Total Asset Turnover Ratio
1.32
1.37
1.69
1.8
Debt Management Ratios
Total Debt to Total Assets (%)
59.09…
Chapter 4 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
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