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WACC, Industries cash cycle, Estimate sales, Goal

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210. Which of the following statements is false regarding the cost of capital?
The cost of capital should consider the flotation costs.
All other being equal, it is preferable to use market value weights than book value weights.
The WACC is the most appropriate discount rate for all projects.
Should include the cost of retained earnings.

212. Which of the following statements is true?
The optimal credit policy minimizes the total cost of granting credit.
Firms should avoid offering credit at all cost.
An increase in a firm's average collection period generally indicates that an increased number of customers are taking advantage of the cash discount.
Character, refers to the ability of a firm to meet its credit obligations out its operating cash flows.
The optimal credit policy, is the policy that produces the largest amount of sales for a firm.

213. Which one of the following industries is most apt to have the shortest cash cycle?
electric utility company
airplane manufacturer
fast-food restaurant
furniture store
clothing manufacturer

214. Delphinia's has the following estimated quarterly sales for next year. The accounts receivable period is 30 days. What is the expected accounts receivable balance at the end of the second quarter? Assume each month has 30 days.

Sales:
Q1 $1,800
Q2 $1,700
Q3 $2,100
Q4 $1,900

$567
$600
$821
$1,134
$1,200

215. Which of the following statements is true regarding the goal of financial management?
The goal of maximizing the value per share of existing stock is relevant to all organizations.
The ultimate goal of financial management is maximizing earnings and profits.
For a company considering international operations, the goal will be the same but the company will have to consider the local, social, economical, and political environment in the decision-making process.
None of the above are true statements.

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Solution Preview

210. Which of the following statements is false regarding the cost of capital?

The WACC is the most appropriate discount rate for all projects.

WACC should be adjusted as per the risk of the project

212. Which of the following statements is true?
...

Solution Summary

Response discusses the WACC, Industries cash cycle, Estimate sales, Goal of financial management

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See Also This Related BrainMass Solution

Evaluating a Financial report - Kroger

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 Ratio
Net Profit Margin Ratio
ROI
ROE
Price-to-Earnings Ratio (P/E) Ratio

I need help trying to analyze Kroger's working capital management. Explaining why the companyÂ's operating and cash cycles are currently optimized. Based on Kroger's last two financial statements, I need information on the long-term debt held by the corporation, maturity dates and yield to maturity.

I must list the types of stock issued by the company, the stocks' current selling price, and the 52-week average selling price, compute the weighted average cost of capital (WACC) for both years and discuss my findings.

My information must include a brief analysis that summarizes the data gathered and evaluates how Kroger compares to industry averages.
Should I buy this company's stock and why?

All I have for reference is :
http://www.annualreports.com where one of the other reports can be found and the attached. Kroger's 2007 Annual report is on page 74.

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