Questions from Corporate Finance

Q: : The managers of Corine ’ s Candies like to use the

The managers of Corine ’ s Candies like to use the EBITDA multiple to value the firm. EBITDA was approximately $10 million in 2016. Use the market value of equity from Practice Problem 34 and a debt...

Q: In year 1, a firm had cash and cash equivalents of

In year 1, a firm had cash and cash equivalents of $150,000, accounts receivable of $35,000, and inventories of $23,000. In year 2, it had cash and cash equivalents of $80,000, accounts receivable of...

Q: We can calculate cash flow from operations (CFO) as net

We can calculate cash flow from operations (CFO) as net income + non‐cash expenses + change in working capital ignoring cash. In year 2, the change in working capital for Finns ’ Fridges was -$25. Fin...

Q: How have management compensation schemes been designed to better align owner-

How have management compensation schemes been designed to better align owner-manager interests? How well have these schemes performed in this regard?

Q: Find the operating margin for Finns ’ Fridges for both years (

Find the operating margin for Finns ’ Fridges for both years (you may assume that the net operating income is equal to the firm ’ s EBIT). Was there an increase or a decrease in the operating margin,...

Q: Calculate the fixed asset turnover for Finns ’ Fridges for years 1

Calculate the fixed asset turnover for Finns ’ Fridges for years 1 and 2 (note that net fixed assets correspond to “property and equipment (net)” on the company ’ s statement of financial position). H...

Q: Explain yield to maturity in terms of the spot rate.

Explain yield to maturity in terms of the spot rate.

Q: Determine leverage ratios, including debt ratio and debt‐equity ratio

Determine leverage ratios, including debt ratio and debt‐equity ratio, in both years. Has Excelsior Inc. improved on its leverage ratios in year 2?

Q: You are a financial advisor and one of your clients comes to

You are a financial advisor and one of your clients comes to you with a convertible bond that has a coupon rate of 8 percent. The market interest rate is 6 percent. The share price of the company that...

Q: Adam has saved C$1,000 and plans to go

Adam has saved C$1,000 and plans to go surfing in Australia next summer. He won’t need the money for a year, so he decides to invest it. Adam could invest the money in Canada, where a T‐bill will earn...