Questions from Financial Management

Q: Wysoski Enterprises is considering a stock dividend. The firm’s capital includes

Wysoski Enterprises is considering a stock dividend. The firm’s capital includes 3 million shares of $1 par value stock issued at an average price of $8. Retained earnings total $20 million. State...

Q: BWP projects sales of 100,000 units next year at an

BWP projects sales of 100,000 units next year at an average price of $50 per unit. Variable costs are estimated at 40% of revenue, and fixed costs will be $2.4 million. BWP has $1 million in bonds o...

Q: DeSquam Inc. pledges receivables of $250M per year to the

DeSquam Inc. pledges receivables of $250M per year to the Sharkskin Finance Company which advances cash equal to 80% of the face value of the accounts pledged. DeSquam’s receivables are usually colle...

Q: Parnell Bolts Inc. has 20 million common shares outstanding, and

Parnell Bolts Inc. has 20 million common shares outstanding, and net income of $30 million. The stock sells at a P/E of 15. The company has $5 million available to pay the next quarterly dividend, b...

Q: Southern Fabrics Inc factors all of its receivables. The firm does

Southern Fabrics Inc factors all of its receivables. The firm does $150 million in business each year, and would have an ACP of 36.5 days if it collected its own receivables. The firm's gross margin i...

Q: The Holderall Rope and Yarn Co. has 2 million common shares

The Holderall Rope and Yarn Co. has 2 million common shares outstanding. Its capital structure is two-thirds equity. The firm expects earnings of $10 million next year, and anticipates capital spendi...

Q: Rocky Inc. can buy its inventory from any of four suppliers

Rocky Inc. can buy its inventory from any of four suppliers all of which offer essentially the same pricing and quality. Their credit terms, however, vary considerably as follows: a. Calculate the...

Q: The Philipps Lighting Company manufactures decorative light fixtures. Its revenues are

The Philipps Lighting Company manufactures decorative light fixtures. Its revenues are about $100 million a year. It purchases inputs from approximately 20 suppliers most of which are much larger co...

Q: Thompson Inc. has a $10M revolving credit agreement with its

Thompson Inc. has a $10M revolving credit agreement with its bank. It pays interest on borrowing at 2% over prime and a ¼% commitment fee on available but unused funds. Last month Thompson had borrowi...

Q: The Conejo Corp. borrows from its bank under an $8

The Conejo Corp. borrows from its bank under an $8 million revolving credit arrangement. It pays a base rate of 9% on its outstanding loan plus a ¼% commitment fee on the unused balance. The firm ha...