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mart [117]
3 years ago
6

Assume you work for a valuation firm, and you have been given the assignment of valuing a local law firm comprising three partne

rs and four associates. One partner plans to retire spoon, and the partners are trying to agree on the value of a one-third interest in the firm in order to buy out the departing partner's interest. The firm's revenue per partner is two times higher than that of the average firm of a similar size, but you soon discover that 80% of firm revenue is from one client.
Required:
Please raise one question about this scenario that you would want to address.
Business
1 answer:
sleet_krkn [62]3 years ago
5 0

Answer:

Valuation of a law firm

One question to raise:

Which of the partners brought in this one powerful client?  I hope it is not the retiring partner.

Explanation:

If the retiring partner had brought in the client and had been in charge of the client's business, the firm's valuation would be drastically influenced by these facts.  It is likely that the client might retire the service as the retiring partner retires.  This will jeopardize the revenue outlook of the firm, its future prospects, and its current value.  However, if the retiring partner is not linked to this powerful client, then it may be that the firm's value will not be at risk.  Again, over-dependence on one client for firm's revenue is does not augur well for the firm.  Moreover, the margin of over-dependence is too high for comfort.  There is serious need for a review of the relationship, not in terms of termination, but in terms of seeking for more big-ticket clients to relatively reduce the over-dependence.

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If the yield curve is upward sloping, then short-term debt will be cheaper than long-term debt. Thus, if a firm's CFO expects th
Vinil7 [7]

Answer:

A. True

Explanation:

As per the given situation, if the yield curve is sloping upwards, it indicates that short-term interest rates are smaller than long-term interest rates.

In this case the bonds have an opposite relationship between the bond price and interest rates and If the short-term rates are lower then the value of the short-term bonds which includes the current liabilities, is higher. Short term bonds are loans to be settled in one.

As we know that

Current ratio = Current assets - Current liabilities

Current liabilities include short-term debt, hence the short-term value is higher as a result of a low current ratio.

Therefore the given statement is true

3 0
4 years ago
The most recent financial statements for Bello Co. are shown here: Income Statement Balance Sheet Sales $ 20,700 Current assets
givi [52]

Question : What is sustainable growth Rate

Answer:

Sustainable growth Rate = 1.69 %

Explanation:

Sustainable growth Rate = Return on Equity x Retention Rate

Where Return on Equity = Asset Utilization Rate x Profitability Rate x Financial Utilization Rate

Asset Utilization Rate= Total Sales/Total Assets

                                   = 20,700/46,260 = 0.45

Profitability Rate = Net Income/ Total Assets

                           = 4,940/46,260 = 0.11

Financial Utilization Rate = total debt/ Total equity

                                          = 16,780/ 29,480 = 0.57

Return on Equity = 0.45 x 0.11 x 0.57

                             =0.028

Retention Rate = 1- dividend pay out ratio

                         = 1-0.40

                         = 0.60

Sustainable growth Rate = 0.028 x 0.60

                                           = 1.69 %

6 0
4 years ago
Toby has been working on collecting tidbits over the past year from a financial firm's trash in an effort to eventually break in
FinnZ [79.3K]

Answer:

By acting or posing as a waste management collector looking to fix the dumpster or collect the debris

Explanation:

The computer as an electronic machine has served as a tool or an object of the crime, subject of the crime and an instrument of the crime

Cyber crime

This is simply known as a criminal act. It is the process by which there is the stealing or destruction of information, resources, or funds utilizing computers, computer networks and the Internet.

Computer fraud

This is simply a type of fraud committed with the use of contemporary technology and it is regarded as a law crime. It includes theft of information and corporate espionage etc.

Most cyber crimes are usually well organized. The individual committing the crime usually puts a lot of efforts in achieving their goal. Toby could only have gained access to the company dumpster if he poses as the one or company sent to collect the trash.

4 0
3 years ago
has the following current assets: cash, $1,200; receivables, $1,500; inventory, $2,000 and other current assets, $1,300. Airline
pogonyaev

Answer:

Current Ratio =  1.5

Working Capital = $2,000 million

Explanation:

Current Ratio = Current Assets / Current Liabilities

                       = ($1,200 + $1,500 + $2,000 + $1,300) / ($1,000 +  $3,000)

                       = $6,000 / $4,000

                       = 1.5

Working Capital = Current Assets - Current Liabilities

                           = $6,000 million - $4,000 million

                           = $2,000 million

5 0
3 years ago
Which of these is an example of an entrepreneur?
Lubov Fominskaja [6]
Option A. Jessie has the idea for a new phone app so he spend his money to set up a business
8 0
3 years ago
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