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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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Angela has been working for a local small business called Personal Wellness for the last three years. It is a retail business th
GarryVolchara [31]

Answer:

Government regulations.

Explanation:

Government regulations is a law that controls the way that a business can operate, or all of these laws considered together

3 0
3 years ago
Star Repairs Co. does all the repair work for a medium-sized manufacturer of handheld computer games. The games are sent directl
Oduvanchick [21]

Answer:

The correct answer is "$120,250".

Explanation:

The given values are:

Opening inventory

=  $38,500

Closing inventory

= $15,250

Purchases

= $97,000

Now,

The cost of materials used during the month of February will be:

= Opening Inventory + Purchases - Closing Inventory

On putting the estimated values in the above formula, we get

= 38,500+97,000-15,250

= 120,250 ($)

6 0
3 years ago
Working for a very large organization in the tractor manufacturing industry, John always heard complaints from customers about t
Ksju [112]

Answer:

The correct answer is letter "C": Work experience.

Explanation:

People's work experience allows them to obtain knowledge in the fields they developed their careers in. There are many cases in which individuals start working n large entities to have an idea of how certain business is handled to then start their own companies confident that the knowledge acquired will be enough to run the organization.

In John's case, <em>thanks to the complaints he heard while he was acquiring work experience in a tractor manufacturing company, he was able to open his own business to resolve the common issues he was already aware of.</em>

3 0
3 years ago
A company owns land that is used as a softball diamond and recreational park for hosting employee picnics. Once a year the compa
olga_2 [115]

Answer:

Commercial General Liability Policy will not provide compensation for injured caused by softball to the Director

Explanation:

Commercial General Liability (CGL) is an insurance policy that provide protection and assurance to a business organisation against any legal liability arising from the use of its property, while in the premises of the insured, from use of product.

The Commercial General Liability  provides the coverage below:

-Liability arising from Bodily injury and property damage

-Liability arising from Personal and advertising injury and Medical payments

In this director scenario, the CGL have in its provision and condition to provide compensation for the injury caused as a result of their actions (e.g. building collapse, left broken bottles, bad product which directly affected third party) but the director was injured by his own accompanied property and have no relation whatsoever with the Land company. Hence no indemnity or compensation will be provided under the Commercial General Liability Policy.

6 0
3 years ago
If a Florida strawberry wholesaler operates in a perfectly competitive market, that wholesaler will have a ________ share of the
Goryan [66]

Answer:small; standardized (commodity); little, if any

Explanation:

A firm which operates in a perfectly competitive market are characterised by:

1. Many sellers. Therefore sellers have a small market share.

2. Goods are homogenous or standardised.

3. There's little or no need for advertising

4. Firms are price takers. Market price is set by forces of demand and supply.

5. There are no barriers to entry or exit of firms.

6. Firms make zero economic profit in the long run.

I hope my answer helps you.

7 0
3 years ago
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