Answer:
The company's average days to collect receivables is 18.25 days.
Explanation:
For computing the company's average days to collect receivables, first we have to calculate the account receivable turnover ratio. The formula is shown below
Account Receivable Turnover ratio = Net credit Sales ÷ Average accounts receivable
where,
Net credit sales is given
And, the average accounts receivable = (Year 1 + Year 2) ÷ 2
= ($15,000 + $12,000) ÷ 2
= $13,500
So, Account Receivable Turnover ratio = $270,000 ÷ $13,500 = 20
Now, average days to collect receivables = Number of days in a year ÷ Account Receivable Turnover ratio
= 365 ÷ 20
= 18.25 days
Hence, the company's average days to collect receivables is 18.25 days.
Answer:
increase
Explanation:
Break-even point is used to determine the minimum number of units a business needs to sell in order to fully cover the fixed costs. The break-even formula is below;
Break-even = Fixed cost / (Sale price - Variable cost)
If sales price (SP) decreases while keeping other factors; variable cost(VC) and fixed cost(FC) constant, the denominator amount will be smaller, making the break- even point to increase.
Answer:
a. Suppose GP issues $ 100$100 million of new stock to buy back the debt. What is the expected return of the stock after this transaction?
b. Suppose instead GP issues $ 50.00$50.00 million of new debt to repurchase stock. i. If the risk of the debt does not change, what is the expected return of the stock after this transaction?
ii. If the risk of the debt increases, would the expected return of the stock be higher or lower than when debt is issued to repurchase stock in part (i)?
- If the risk of the debt increases, then the cost of the debt will increase. Therefore, the company will need to spend more money paying the interests related to the new debt which would decrease the ROE compared to the 18% of (i). Since we do not know the new cost of the debt, we cannot know exactly by how much it will affect the ROE, but I assume it will still be higher than the previous ROE.
Explanation:
common stock $200 million
total debt $100 million
required rate of return 15%
cost of debt 6%
current profits = ($200 million x 15%) + ($100 x 6%) = $30 million + $6 million = $36 million
if equity increases to $300 million, ROI = 36/300 = 12
if instead new debt is issued at 6%:
equity 150 million, debt 150 million
cost of debt = 150 million x 6% = $9 million
remaining profits = $36 - $9 = $27 million
ROI = 27/150 = 18%
Answer:
The answer is "The last choice"
Explanation:
While comparing 2 assets or portfolio management, the risk of each portfolio and the rates of return of each portfolio should be taken into consideration. Whether the same danger is in the two assets. One should be preferred with both the higher return and one from the lowest risk should be recommended unless the two have the same rate of return. Portfolio A consequently either has a higher return and an at least as low fluctuation as B, or even lower volatility as well as an anticipated return at least as strong as B.
Any level of education is very important in all aspect however the first degree is the most important and with the highest return on investment. The first degree is undergraduate degree.
