Answer:
Option E is correct
An increase in the depreciation expense will not affect the cash coverage ratio.
Explanation:
Option E is correct
An increase in the depreciation expense will not affect the cash coverage ratio.
Cash coverage ratio tells us if firm is capable of paying its current liabilities with the cash or cash equivalent. It can not allow other assets to be used for paying the current liabilities.
Formula for Cash Coverage ratio:
Cash Ratio=
So, Cash coverage ratio is independent of expenses whether it is a depreciation or some other expense.
Answer:
Botox Facial Care
20X1 20X2
a. Earnings per share $1.65 $1.93
b. P/E ratio 25.45x 27.46x
c. The P/E ratio changed from 25.45x to 27.46x following a change in earnings per share and the stock price per share.
Explanation:
a) Data and Calculations:
20X1 20X2
Earnings after taxes $330,000 $386,000
Outstanding shares 200,000 200,000
Earnings per share $1.65 $1.93
Stock price $42.00 $53.00
P/E ratio 25.45x 27.46x
Earnings per share = Earnings after taxes/Outstanding shares
P/E ratio = Stock price/Earnings per share
Answer:
The Beta is 1
The required return increases to 13%
Explanation:
The formula for required return is given below:
Required Return = Risk-Free Rate of Return + β(Market Return – Risk-Free Rate of Return)
required return is 11%
risk-free rate of return=7%
Beta is unknown
market return-risk free rate of return is market risk premium is 4%
11%=7%+beta(4%)
11%-7%=beta*4%
4%=beta*4%
beta=4%/4%
beta=1
If the market risk premium increased to 6%,required return is calculated thus:
required return=7%+1(6%)
required return =13%
This implies that the riskier the stock, the higher the market risk premium, the higher the required return to investors.
Answer:
True
Explanation:
The path-goal theory emphasizes a leadership style that enhances the performance of the subordinates by helping team members identify clearly the path through which they would accomplish their goals coupled with the fact that such accomplishment would be met by great rewards.
In achieving the desired results under the path-goal theory, employees are reminded of behaviors that would yield positive outcomes since the right attitude which is a product of behavior is important to deliver on job set targets.
Having the right positive mental attitude sets success apart from failure.
Answer:
The balance sheet represents the total assets of the company and how they are funded, whether through equity or by debts.
Explanation:
Balanced sheet
A balance sheet is an annual report of finance that accounts at a particular time on the funds, debts or on equity of any corporation and lays the foundation of calculations for calculating return rates and determining its financial performance of the company.
The balance sheet represents the total assets of the company and how they are funded, whether through equity or by debts.
