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3 years ago

If there is a substantial increase in bad debts, what might this mean?

1 answer:

6 0

In the case of lending money (for a vehicle or a mortgage for example), this may be an indication of irresponsible lending practices. If there is a substantial increase in bad debts, it means that less creditworthy borrowers (borrowers who are less capable or likely to repay) are obtaining credit too easily.

In the case of bad accounts receivable for a company, there are similar implications, but it also could mean that the inventory that a company is selling is not being sold quickly enough by the retailer. One example could be ToysRUs having overdue accounts due to its partnered toy makers, such as Hasbro. It could be a sign that the demand for the product is not sufficiently high to sell the full amount of purchased inventory, at least when being sold through that retailer.

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The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 1

Keith_Richards [23]

Answer:

$259.34

Explanation:

the value of the stock can be determined using the two stage dividend discount model.

In the first stage, the present value would be determined using a discount rate of 18%.

In the second stage, the present value would be determined using a discount rate of 6%.

Values from the first and second stage would be added together to determine the value of the stock

First stage

Present value in year 1 = ($3.2 x 1.18) / 1.087 = $3.47

Present value in year 2 = ($3.2 x 1.18²) / 1.087² = $3.77

Present value in year 3 = ($3.2 x 1.18³) / 1.087³ = $4.09

Present value in year 4 = ($3.2 x 1.18^4) / 1.087^4 = $4.44

Second stage

($3.2 x 1.18^4 x 1.06) / (0.087 - 0.06) = 243.57

Value of the stock = $3.47 + $3.77 + $4.09 + $4.44 + 243.57 = $259.34

7 0

2 years ago

Which kind of listing gives one broker the right to sell, but allows the owner to sell the property and not owe a commission to

Veseljchak [2.6K]

Answer:

Exclusive Agency Listing

Explanation:

For this type of listing, the broker represents the real state seller. However, the seller has the right to sell the property by themselves. If the property were to be sold by other means different that the broker's, the agency will not receive a commision from the seller.

5 0

3 years ago

That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified

daser333 [38]

The answer is:
"Trial Balance"

The full sentence will be as follow:
That the total dollar amount of the debits equals the total dollar amount of the credits in the ledger accounts can be verified through a trial balance.
Trial Balance means a statement with all the debits and credits in an account book along with the mention of any difference showing a mistake.

7 0

3 years ago

Assume that because of a new law, the types of significant transactions a partnership engages in are no longer lawful. two of th

hammer [34]

No thsy will have to sell their share

3 0

3 years ago

Perine, Inc., has balance sheet equity of $5.4 million. At the same time, the income statement shows net income of $783,000. The

S_A_V [24]

Answer:

The target stock price in one year is $149.93

Explanation:

Fly Away, Inc., has

Balance sheet equity of (E) = $ 5,400,000

Also, the income statement shows net income of (NI) = $783,000.

The company paid dividends of (D) = $438,480

Shares of stock outstanding (N) = 100,000

Benchmark PE ratio = 18

Question = what is the target stock price in one year?

We need the expected EPS at the end of next year and not this year.

EPS this year, E₀ = NI / N

= 783,000 / 100,000

= $ 7.83

Retention Ratio, "R" = 1 - Dividend payout ratio = 1 - D/NI

= 1 - 438,480 / 783,000

= 1 - 56.00%

= 44.00%

Return on equity, ROE = NI / E

= 783,000 / 5,400,000

= 14.50%

Growth rate in earnings, g = R x ROE

= 44.00% x 14.50%

= 6.38%

Hence, expected EPS next year, E₁ = E₀ x (1 + g)

= $ 7.83 x (1 + 6.38%)

= $ 8.33

Hence, target price next year, P = Benchmark PE ratio x E₁

= 18 x $8.33

= $149.93

The target stock price in one year = $149.93

4 0

3 years ago