According to the residual theory of dividends, if the firm's equity need is less than the amount of retained earnings, the firm would ___________ borrow to pay the cash dividend, declare a dividend equal to the remaining balance, pay no cash dividends, or not need to consider its dividend policy
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Debt Financing; Capital Structure/Budget/Cost, Cash Conversion Cycle; Payout Ratio, Trade-Off Theory etc..
Please assist me with the attached problems. Thanks! Keywords: Trade-off theory, debt financing, target debt ratio, capital structure, residual/optimal dividend policy, cash conversion cycle, market value, cost of capital, recapitalization, stocks, shares, payout ratio, capital budget, trade credit, inventory conversion perio
How do companies decide in practice which route to follow in raising capital? The decision is complex and related to a company's balance sheet, market conditions, outstanding obligations and a host of other factors. Discuss the various factors and theories one should keep in mind while taking these decisions.
In each of the theories of capital structure, the cost of equity rises as the amount of debt increases. So, why don't financial managers use as little debt as possible to keep the cost of equity down? After all, isn't the goal of the firm to maximize share value (and minimize shareholder costs)?
Wells Manufacturing, Inc. has projected its investment opportunities over a 5-year planning horizon. The cost of each year's investment and the amount of internal funds available for reinvestment for that year follow. The firm's debt-equity mix is 40 percent debt and 60 percent equity. There are currently 125,000 shares of commo
Trade-off theory. The trade-off theory provides several insights to financial managers concerning optimal capital structure. Which of the following statements is false?
The trade-off theory provides several insights to financial managers concerning optimal capital structure. Which of the following statements is false? a. Other things equal, firms with large amounts of marketable fixed assets should use more debt financing than firms whose value stems mostly from intangible assets. b. Other t
1. Consider the shape of the current Treasury Yield Curve. a. What does the shape of the current curve tell us about the market's expectation of future interest rates? Explain using the liquidity premium theory and the expectation theory. b. What factors might explain the market's expectations about the future interest rates?
A company with a stock price of $50.00 and the following equity accounts issues a 5% stock dividend. How will the equity accounts change and what will the new stock price be? Common stock @ $1 par value $200,000<br> Additional paid-in capital $1,800,000<br> Retained income $3,000,000<br> Stockholder's equity