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Eduardwww [97]
3 years ago
7

The firm projected its proforma of financial statements using AFN method and finds that next year its AFN is $2 million. Its tot

al asset this year is $40 million and its net sales this year is $50 million. The CFO has decided to finance its entire projected AFN through issuing common stock. What would you expect to happen in next year’s financial ratio based on AFN method if we expect its net income remains constant?
Business
1 answer:
Varvara68 [4.7K]3 years ago
5 0

Answer:

Its earnings per share will decrease.

Its return on equity will go down.

Its equity multiplier will go down.

Explanation:

Since net income remains the same, earnings per share will decrease. This happens because there will be more stocks outstanding (the denominator in the EPS formula), so the result will be lower.

Return on equity will also decrease, since net income will remain the same while equity increases (same logic as EPS).

Unless this company is 100% financed through equity, it will have some debt (liabilities). The equity multiplier = total assets / total equity. E.g. total assets increase from $20 to $22 million, and total equity increases from $30 to $32 million.

Original equity multiplier = $40 / $30 = 1.333

Equity multiplier after issuing more stocks = $42 / $32 = 1.3125

C. Its equity multiplier will go down.

D. Its current ratio will go down.

E. Its quick ratio will go down.

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In the early 1900s the biggest challenges most businesses faced was getting the products from the places where they were produce
bogdanovich [222]

Answer:

True

Explanation:

Businesses has always had its challenges and also more peculiar challenges from time immemorial and it is so even today despite several business models and the likes being in operation.

In the 1900s, one of the peculiar challenges of businesses was the inability of manufacturers to transport their goods from the point of production to the points of sale. In the 1900s, railways began to become more open than from the time of rail owners and also vehicles as we know today began to come into existence. Overtime, heavy duty vehicles capapble of transporting and lifting good from the point of production to its point of sale began to come up.

Cheers.

8 0
3 years ago
Joe sends a scathing email to his boss regarding increased work hours. Joe tries to deny sending the email, but is unable to due
Artemon [7]

Answer:

nonrepudiation.

Explanation:

Non repudiation is assurance that you cannot deny something.

It refers to ensure that a person to contract cannot deny the sending of the message that they originated.

So when Joe sends a withering email to this about the work hours have increased.So when Joe tries to deny sending the mail and unable to deny the sending because of the use of digital signature it is an example of nonrepudiation.

7 0
3 years ago
When a proposed merger between two companies is reviewed by the government, the relevant market is defined by ________.
sukhopar [10]

Answer:

whether or not there are close substitutes for the products of the two firms

Explanation:

The law watches closely for mergers that actively seek to inhibit or totally annihilate competition in the market which will be harmful for consumers. Mergers such as horizontal mergers, vertical mergers tend to bring about a monopoly whereby sellers aim to coordinate in a such a way that there is an agreement amongst them and profit is ensured while market becomes less efficient.

3 0
3 years ago
The controlling account in the general ledger that summarizes the individual customer accounts in the subsidiary ledger is entit
Bas_tet [7]

Answer:

The correct answer is (c)

Explanation:

A controlling account is an adjustment account for which a subsidiary ledger is generally created. It helps to further track the transactions in detail. A controlling account is an account in the general ledger that is entitled as accounts receivable. This account includes a separate account for every single customer who makes a credit purchase.

4 0
3 years ago
The denominator in the fixed asset turnover ratio is
jonny [76]
The denominator of the fixed asset turnover ratio is AVERAGE FIXED ASSET.
The fixed assert turnover ratio refers to the ratio of sales to the value of fixed asset of a company. The ratio is very important in evaluating how a company is using its fixed assets to generate sales.
Mathematically, fixed asset turnover ratio = Net sales / Average fixed assets.
The numerator is net sales while the denominator is average fixed asset. 
4 0
3 years ago
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