Answer: a. The firm must purchase lumpy assets to achieve the increase in sales.
Explanation:
EvenFlo Pipes needs to sell more pipes in order to see an increase in sales. Assuming they are the producers, they will need to produce more pipes than they have been doing and this will need them to increase their production capacity.
To do so they would have to invest in fixed assets as these are what produce pipes. This is why the firm will have to purchase lumpy assets that will help them produce and sell more pipes.
Answer:
The company's WACC is 9.14%
Explanation:
cost of preferred stock
= (dividend on preferred stock)/(current market price)
= [$100*4%]/$72
= 5.56%
total finance = debt + equity + preferred stock
= (8,000*$1,060) + (310,000*$57) + (15,000*$72)
= $8,480,000 + $17,670,000 + $1,080,000
= $27,230,000
weight of debt = debt/total finance
= $8,480,000/$27,230,000
= 0.31
weight on equity = equity/total finace
= $1.080.000/$27,230,000
= 0.04
WACC
= (weight of debt*after tax cost of debt) + (weight on equity*cost of equity)
= (0.31*0.0393) + (0.65-0.1185) + (0.04*0.0556)
= 9.14%
Therefore, The company's WACC is 9.14%
Answer:
False
Explanation:
In the given question it is mentioned that the employees earned vacation pay of $35,000 during the first year of the operation.
Hence,
the expenses should be recorded as the vacation pay expenses in the same year not in the following year i.e the second year whether the employees take the vacation in the same year or the next year.
'Micro is the study of individuals and business decisions while macroeconomics while macro studies the decisions of the governments and countries.'
Microeconomics examines individual markets while macroeconomics examines the economy.
Answer:
Friendly Fashions:
Ratios Calculations in 2018:
1) Return on Equity = Net Income divided by Equity x 100
Return on Equity = $170/$1,780 x 100 = 9%
2) Return on the market value of equity = share price/average shares outstanding = $8/710 x 100 = 1.12%
3) Earnings per share = Net Income divided by average shares outstanding = $170/710 = $0.24
4) Price-earnings ratio = Market value per share/Earnings per share = $8/$0.24 = $33.3
Explanation:
1) Return on Equity: The return on equity is a measure of the financial performance of an entity, which evaluates the effectiveness of management in using assets to create profits.
2) Return on the market value of equity: This measures the profit yield on the stock market capitalization. It measures the intrinsic value of a stock by comparing the share price to the number of shares outstanding. It is also called the market capitalization.
3) Earnings per share: This is a measure of a company's profitability. It can be used as an indicator to pick stock to buy. To determine the net income used for this calculation, it is necessary to deduct the dividend of preferred stock, where it exists, before arriving at the net income.
4) Price-earnings ratio: This company valuation method measures the share price relative to the earnings. It is also called the price multiple and earnings multiple. It shows how much an investor can pay in dollars in order to earn a dollar of earnings. It also indicates if a stock is overvalued or undervalued.
