1. A stock repurchase may be a signal that a. a firm's stock is overvalued b. a firm's stock is undervalued c. a firm is short on funds d. a firm's bonds are overvalued e. none of the above are accurate
Recall that Miller Modigliani 1961 on dividends says they are not relevant to firm value if the firm's target debt/equity ratio is fixed and investments do not change. What if we change investments or capital structure? Then, dividends could alter firm value to the shareholders. Assume the Base Case Firm has 100 shares at $
Problem 30 [(EBIT -26-30)(1-.4) - 2] /10 = [(EBIT -26)(1-.4) -2)] /14 After the algebra, you should get an answer of 134.33 University technologies, Inc. (UTI) has a current capital structure consisting of 10 million shares of common stock, $200 million of first-mortgage bonds with a coupon interest
Journal entries (where to debit/credit which account and why, why certain entries are adjusted because of activity in other accounts) Problem 11-2A: Cash dividends, treasury stock, and statement of retained earnings L.O. C2, C4, P2, P5 Kohler Corporation reports the following components of stockholders' equity on December 31
Complete the readings for this unit, including Case 1.2 titled "Nike: Somewhere Between a Swoosh and a Slam Dunk." Study the financial statements and notes provided. I need help to respond to the lettered series of questions at the end of the case. Then, write a 300- to 400-word essay explaining your position. Make sure your
Cash $25,000 Fixed Assets $190,000 --------------------------- Total $215,000 Equity $215,000 5,000 shares of stock outstanding with a declared dividend of $1.20 per share. What if the company whats to repurchase $6,000 worth of stock? What effect will this transaction have on the equity of the company? How m
A firm has 20 million common shares outstanding. It currently pays out $1.50 per share per year in cash dividends on its common stock. Historically, its payout ratio has ranged from 30% to 35%. Over the next five years it expects the earnings and discretionary cash flow shown in millions. a. Over the five-year period, what
Dear Brainmass, I am having some difficulty in understanding how to prepare the journal entries for these independent transactions. I would really appreciate the assistance when you get the chance. Thank you so much in advance for taking the time to review my post. Prepare Journal Entries for the following independent tr
1. Dryer Company had 300,000 shares of common stock issued and outstanding at December 31, 2003. During 2004, no additional common stock was issued. On January 1, 2004, Dryer issued 400,000 shares of nonconvertible preferred stock. During 2004, Dryer declared and paid $240,000 cash dividends on the com
Delta Corporation earned $2.50 per share during fiscal year 2008 and paid cash dividends of $1.00 per share. During the fiscal year that just ended on December 31, 2009, Delta earned $3.00 per share, and the firm's managers expect to earn this amount per share during fiscal years 2010 and 2011, as well. a. What is Delta's pa
Prepare a financial statements analysis using the financial statements of Landry's Restaurants located in Appendix A of the text, Fundamentals of Financial Accounting 1st ed., by Phillips, Libby, and Libby, compute the following ratios for 2002 and 2003 to the following assignments from the e-text, Fundamentals of Financial Acco
3. What relationship do you see between a company's board of directors and the development of the business strategy? 4. Do you believe that a company's board of directors can change the ethical standards in a business? How can they do it?
3. As a financial manager for Old's California, you have the following information: a) The company follows a residual dividend policy; b) The total capital budget for next year is likely to be $5 million; c) The forecasted level of potential retained earnings next year is $8million; d) The target or optimal capital struc
If the market capitalization rate for each stock is 10 percent, which stock is the most valuable? What if the capitalization rate is 7 percent?
Consider the following three stocks: a. Stock A is expected to provide a dividend of $10 a share forever. b. Stock B is expected to pay a dividend of $5 next year. Thereafter, dividend growth is expected to be 4 percent a year forever. c. Stock C is expected to pay a dividend of $5 next year. Thereafter, dividend growth is
P3-14 Pro forma balance sheet Peabody & Peabody has 2006 sales of $10 million. It wishes to analyze expected performance and financing needs for 2008-2 years ahead. Given the following information, respond to parts a and b. (1) The percents of sales for items that vary directly with sales are as follows: Accounts receivable
I am looking for some help with putting together information on The Kroger Co.'s last two annual reports. I need to compute the eight ratios listed below for two consecutive years, discuss their significance for management and compare them to industry averages. Current Ratio Quick Ratio Inventory Turnover Ratio Debt Rati
Read the letter to shareholders from the CEO or chairman of the board. ? Evaluate the CEO's letter, in 200 to 300 words. An effective annual report letter from company leadership should include: o An assessment of the firm's performance in the last year o Both positive and negative developments o Ideas for strateg
The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired.
I am having a really hard time figuring this out. Can somebody help explain this to me? I am not getting the correct answer. The charter of a corporation provides for the issuance of 100,000 shares of common stock. Assume that 40,000 shares were originally issued and 5,000 were subsequently reacquired. What is the amount
Ladder Publishing follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm's dividend per share? a. The firm's net income increases. b. The company increases the percentage of equity in its target capital structure. c. The nu
Comprehensive Review Problem: From Recording Transactions (including adjusting Journal Entries) to Preparing Financial Statements and Closing Journal Entries (Chapters 2, 3, and 4) Drs. Glenn Feltham and Gary Entwistle began operations of their physical therapy clinic called Northland Physical Therapy on January 1, 2005. The ann
Solar, Inc. has financial leverage of 36.0% and a net after-tax borrowing cost of 5% on $180 million of net debt. Its return on common equity (ROCE) is 28%. a. What rate of return does this firm earn on its operations? b. Solar, Inc. is considering repurchasing $120 million of its stock and financing the repurchase with further borrowing at a 5% after-tax borrowing cost. If the company wants to maintain the same level of operating profitability, what is the firm's return on common equity after this repurchasing? c. If its equity traded at $18.75 per share at the end of 2005 is expected to earn $1.80 per share in 2006 and $2.05 in 2007. Solar, Inc. pays no dividends and its long-term growth rate for residual earnings equal to 4%. Given these forecasts, what is the rate of return you expect to earn from buying the shares? d. Solar, Inc. reported its after-tax operating income of $220 million in 2005. Its net operating assets were increased from $1,885 million to $2,040 million between 2004 and 2005. During the same period, its sales revenue was increased from $4,050 million to $4,895 million. What was the normalized operating income for year 2005?
Solar, Inc. has financial leverage of 36.0% and a net after-tax borrowing cost of 5% on $180 million of net debt. Its return on common equity (ROCE) is 28%. a. What rate of return does this firm earn on its operations? b. Solar, Inc. is considering repurchasing $120 million of its stock and financing the repurchase with f
Research Arcelor Mittal (http://www.arcelormittal.com/). After reviewing of all the documents you can find on the web and in libraries, write a 2 to 3 page response to the following questions: 1. What is the most important problem facing Arcelor Mittal? 2. What recommendation(s) would you make to Arcelor Mittal, and in wha
Need assistance with Q 9, 10, 11 and B.3. Prepare an analysis of the two companies selected ( Apple & Dell). In your analysis evaluate their financial performance using trend and financial ratio analysis, and analyze their most recent statements of cash flows. You may include charts summarizing ratio and cash flow findings bu
Could you give me your analysis/summary of the purposes of the four basic financial statements. Selected Companies Overview Prepare a 1,050-1,400-word overview of the two companies using their annual reports and business intelligence gathered from the corporate web site, industry publications, or publicly available financial
Please show work to all answers as this is being used as a study guide. Please see the attached file. 6. The following is a comparative balance sheet for a firm for fiscal year 2002 (in millions of dollars): 2002 2001 2002 2001 Operating Cash 60 50 Accounts Payable 1200 1040 Short-Term Investments (at market)
(a) Prepare a 2007 retained earnings statement for Eddie Zambrano Corporation. (Enter all amounts as positive amounts and subtract where necessary.) Eddie Zambrano Corporation Retained Earnings Statement For the Year Ended December 31, 2007 Cum. decr. in income from change in inven
What is the average stock market reaction to: a) a dividend initiation, b) a dividend increase, c) a dividend termination, d) a dividend decrease? Are these reactions logically consistent?
The main advantage of debt financing for a firm is: I) no SEC registration is required for bond issue II) interest expense of a firm is a tax deductible expense III) unlevered firms have higher value than levered firms 1. I only 2. II only 3. III only 4. I and III only
Please see the attached case and help me so that I can do the following problems: 1. Examine the first-round financing in terms of amount raised and valuation. What concerns, if any, would you have had from Sabeer's and Jack's perspective and from Steve's perspective? 2. Evaluate DFJ's proposed first-round term sheet from
The Dunn Corporation is planning to pay dividends of $500,000. There are 250,000 shares outstanding, and earnings per share are $5. The stock should sell for $50 after the ex-dividend date. If, instead of paying a dividend, the firm decides to repurchase stock, a. What should be the repurchase price? b. How many shares s