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External equity needed
If the company has a capital budget requiring an investment of $4 million over the year and it desires to maintain its present debt to total assets (debt ratio) of 0.40, how much external equity must it raise?
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Percentage of Sales Models and Required External Financing
Required External Financing. If the dividend payout ratio in problem 9 is fixed at 50 percent, calculate the required total external financing for growth rates in 2004 of 15 percent, 20 percent, and 25 percent.
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Percent of Sales Method for external financing
466463 Percent of Sales Method for external financing Assume a firm has total assets of $15,580,000, current liabilities of $4,261,000, long term debt of $3,638,000, and net worth of $7,681,000.
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A firm with 30% total debt ratio, total assets of $10 million, and an ROE of 11% has been paying out 60% of earnings to shareholders in the form of dividends. Sales are expected to increase by 15% this year, a faster growth rate than usual. Will external funding be required under these conditions? If so how much? Will the debt-equity ratio remain constant? Show your calculations
Will external funding be required under these conditions? If so how much? Will the debt-equity ratio remain constant?
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External Financing Needed
163688 Figuring Out External Financing Needed Trying to figure out the external financing needed (assuming no income taxes).
Assets and cost are proportional to sales. Debt and equity are not. No dividends are paid.
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External Equity Financing Northern Pacific Heating & Cooling Inc
Total funds needed = $15,000,000
Debt to total assets = 40%
Portion of expansion project to be financed through debt = 15,000,000*40%=6,000,000
Portion of expansion project to be financed through equity = 15000000-6000000=9,000,000
Net Income =
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Cheryl Colby, the CFO of Charming Florist Ltd.
Current Assets 75 Short-term debt 120
Fixed Assets 450 Long-term debt 135
Common stock 50
Retained Earnings 220
Total Assets 525 Total Liabilities & Owner's Equity 525
We
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External funding needed
$360 (+60)
Fixed Assets $550 Long Term Debt $168 (-32)
Equity $622 (+72)
Total Assets $1150 (+100) Total Liab. & Equity $1150 (+100)
Plug number = Increase in current assets- Increase in short tern debt -Increase
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Income Statement and Balance Sheets
Income Statement ($ millions) Balance Sheet ($ millions)
Sales 32.00 Current assets 16
Costs 28.97 Fixed assets 16
Gross profit 3.03 Total assets 32
Taxes 1.03
Net income 2.00 Current debt 10
Long-term debt 4
Dividends 1.40 Total debt 14
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Finance Questions
Return on Equity Firm A and Firm B have debt/total asset ratios of 60 percent and 40 percent and returns on total assets of 20 percent and 30 percent, respectively. Which firm has a greater return on equity?
13.