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nalin [4]
1 year ago
9

You are analyzing the following four companies based on their debt to equity ratio. which company has the highest risk of insolv

ency? company a 2.5 company b 1.0 company c 0.9 company d 3.0
Business
1 answer:
lys-0071 [83]1 year ago
6 0

Company D company has the highest risk of insolvency.

Bankruptcy risk, or insolvency hazard, is the chance that an agency will be unable to satisfy its debt obligations. it is the opportunity for a company turning into insolvent because of its incapacity to service its debt.

There are loads of intricacies when navigating the concern listing of creditors during a liquidation system. In general, secured creditors have the very best priority observed by using precedence over unsecured lenders. The final lenders are frequently paid previous to fair shareholders.

Bad financial control and having a consistent loss of cash may be one in the biggest causes of insolvency. No longer having sufficient cash in the bank to cover monthly expenses such as payroll and hire as well as any surprising prices, can eventually land a business in hot water.

Learn more about businesses here: brainly.com/question/24448358

#SPJ4

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Boss asks you to explain the difference between the Cost of Capital and DiscountRate in a multi-year Net Present Value analysis
babymother [125]

Answer:

Cost of capital is the overall rate of return expected by investors while the discount rate is the minimum rate of return used for appraising a project in order to obtain the net present value.

Explanation:

Cost of capital is calculated as cost of equity multiplied by the proportion of equity in the capital structure plus cost of debt multiplied by the proportion of debt in the capital structure plus cost of preferred stock multiplied by the proportion of preferred stock in the capital structure.

Discount rate is the rate used for determining the attractiveness of a project. This rate is used for determining the net present value of a project.

6 0
3 years ago
One of the most important applications of ratio analysis is to compare a company's performance with that of other players in the
wlad13 [49]

Answer: a. percentage change analysis.

B. Blue Hamster Manufacturing Inc.’s ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.60 to 0.38.

D. A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate orders placed to vendors

Explanation:

1. The analysis which has to do with the calculation of the growth rates of all items from balance sheet and the income statement which is relative to a base year is referred to as the percentage change analysis.

2. The statements that can be included in the analysis report from the question include:

• Blue Hamster Manufacturing Inc.’s ability to meet its debt obligations has improved since its debt-to-equity ratio decreased from 0.60 to 0.38

• A decline in the inventory turnover ratio could likely be explained by operational difficulties that the company faced, which led to duplicate orders placed to vendors.

4 0
3 years ago
"Water and Power Co. is a small company and is considering a project that will require $650,000 in assets. The project will be f
musickatia [10]

Answer:

The answer is =16.7%

Explanation:

Earnings before interest and taxes(EBIT) = $145,000

Tax rate is 25%

Therefore, the applicable tax rate on the earnings is 100% - 25% = 75%

So the Net income is 0.75 x $145,000

Net income = $108,750

The project is financed by 100percent equity and the cost is $650,000.

ROE(Return on Equity) = net income/equity

$108,750/$650,000

=16.7%

7 0
3 years ago
The following transactions occurred during the month of June 2021 for the Stridewell Corporation. The company owns and operates
DanielleElmas [232]

Answer:

Stridewell Corporation

Journal Entries:

Debit Cash Account $625,000

Credit Common Stock $625,000

To record the issue of 125,000 shares for cash.

Debit Office Equipment $102,500

Credit Cash Account $41,000

Credit Note Payable $61,500

To record the purchase of office equipment.

Debit Inventory $250,000

Credit Accounts Payable $250,000

To record the purchase of inventory.

Debit Accounts Receivable $425,000

Credit Sales Revenue $425,000

To record the sale of goods on account.

Debit Cost of Goods Sold $212,500

Credit Inventory $212,500

To record the cost of goods sold.

Debit Rent Expense $5,500

Credit Cash Account $5,500

To record the payment of rent for the month.

Debit Prepaid Insurance $2,880

Credit Cash Account $2,880

To record the payment for insurance for a year.

Debit Accounts Payable $180,625

Credit Cash Account $180,625

To record the payment to suppliers on account.

Debit Cash Account $85,000

Credit Accounts Receivable $85,000

To record the receipt of cash from customers.

Debit Dividend $6,250

Credit Cash Account $6,250

To record the payment of cash dividend.

Debit Depreciation Expense - Office Equipment $2,050

Credit Accumulated Depreciation - Office Equipment $2,050

To record depreciation expense for the month.

Debit Insurance Expense $240

Credit Prepaid Insurance $240

To record insurance expense for the month.

Explanation:

Stridewell's insurance expense that expired for the month is obtained by dividing the Prepaid Insurance by 12 since it is for one year.  Thus, Stridewell obtains $240 ($2,880/12) as the expense for the month.  The balance remaining in the Prepaid Insurance is a current asset which is carried into the next month.

Journal entries help us to identify the accounts involved in each Stridewell's transaction and the account it should debit and the one it should credit. They are the initial record made by Stridewell in its accounting books for each business transaction.

7 0
3 years ago
Creating your own flyer about cars
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Answer:

what

Explanation:

5 0
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