Questions from General Finance

Q: Below are the last three years’ financial statements for Sentec Inc.,

Below are the last three years’ financial statements for Sentec Inc., a distributor of electrical fixtures. a. Compute Sentec Inc.’s working capital requirement (WC...

Q: Indicate the effects of the following transactions on operating margin, invested

Indicate the effects of the following transactions on operating margin, invested capital turnover, and debt ratio. Use + to indicate an increase, – to indicate a decrease, and 0 to i...

Q: Ambersome Inc. has decided against borrowing and to have all its

Ambersome Inc. has decided against borrowing and to have all its assets financed by equity. Furthermore, it intends to keep its payout ratio at 40 percent. Its assets turnover ratio is 0.9, its profit...

Q: The International Industrial Company has an investment project with the following cash

The International Industrial Company has an investment project with the following cash flows: a. What is the net present value of these cash flows at 0, 25, 50, and 100 percent discount rates? b. What...

Q: From the balance sheets and income statements of OS Distributors in Exhibits

From the balance sheets and income statements of OS Distributors in Exhibits 6.1, 6.2, and 6.3, compute the firm’s return on invested capital before tax (ROICBT) , return on capital employed before ta...

Q: Return on equity (ROE) can be estimated using financial statements

Return on equity (ROE) can be estimated using financial statements (book value) or financial market data (market value). The book value of ROE over an accounting period is earnings after tax divided b...

Q: a. If a firm has a return on equity (ROE

a. If a firm has a return on equity (ROE) of 15 percent, a financial multiplier of 2, and does not pay any tax, what is its return on invested capital before tax? b. If a firm has an ROE of 15 percent...

Q: Cite two cases in which a bad decision (that is,

Cite two cases in which a bad decision (that is, a decision that negatively affects the market value of a firm) would increase its return on equity.

Q: Under what intuitive condition will an increase in debt (either short

Under what intuitive condition will an increase in debt (either short-term or long- term) relative to equity always increase a firm’s return on equity? Can the structure of return on equity relationsh...

Q: Comment on the following statements: a. “Only synergistic

Comment on the following statements: a. “Only synergistic mergers have the potential to create value.” b. “If a merger cannot generate synergistic gains through cost reductions, it will not create val...