All categories

2 years ago

Information of Company X:

Business

1 answer:

kondaur [170]2 years ago

7 0

Answer:

a. Calculate Company X's sustainable growth rate

sustainable growth rate = retention rate x return on equity

retention rate = ($12,400 - $8,200) / $12,400 = 33.87%

ROI = $12,400 / $54,000 = 22.96%

g = 33.87% x 22.96% = 7.78%

b. In question (ii), we assume that Company X's management wants to maintain a constant debt-equity ratio and in the next year, the growth rate of Company X is what we've calculated in question (i).Calculate the amount of new debt that Company X has to take.

I will assume that the whole debt is current debt and it changes proportionally as the company's sales grow.

EFN = ($118,000/$160,000) x ($12,448) - ($64,000/$160,000) x ($12,448) - (0.0775 x $172,448 x 0.0778) = $9,180 - $4,979 - $1,040 = $3,161

c. If Company X's management does not want any external financing, what would be the growth rate

ROA = $12,400 / $118,000 = 10.51%

Internal growth rate = (10.51% × 33.87%) / [1 - (10.51% × 33.87%)] = 3.56% / 0.9644 = 3.69%

You might be interested in

Patti volunteered to cover the balance of a coworker's shift so that he could pick up his sick child from day care. this is an

Alex73 [517]

Patti volunteered to cover the balance of a coworker's shift so that he could pick up his sick child from day care. this is an example of organizational citizenship (OCB). OCB stands for <span>person's voluntary commitment within an </span>organization <span>outside her contractual tasks. The father of OCB is Dennis Organ. He defined the term in 1988.</span>

7 0

3 years ago

Most of the property in command economies is owned by who

ozzi

Answer:

In a command economy an authority such as the government, governmental agency, or central planners decide what to produce, how to produce and to whom goods and services will be allocated.

4 0

3 years ago

Buchi owns several financial instruments: stocks issued by seven different companies, plus bonds issued by four different compan

denpristay [2]

If Buchi owns several financial instruments: stocks issued by seven different companies, plus bonds issued by four different companies, her investments are best described as a PORTFOLIO

A range of investments owned by an individual is termed a portfolio.

For instance, when an individual owns different stocks, bonds, and businesses in diverse companies, such an individual is known to have a portfolio.

Portfolios are important for long-term financial goals even though the returns on such portfolios are not immediate.

According to the question, if Buchi owns several financial instruments: stocks issued by seven different companies, plus bonds issued by four different companies, her investments are best described as a PORTFOLIO

Learn more here: brainly.com/question/24598517

7 0

2 years ago

Bryant Company has a factory machine with a book value of $93,100 and a remaining useful life of 5 years. It can be sold for $27

NISA [10]

Answer:

The old machine should be replaced.

Explanation:

Note: See the attached excel file for the the analysis showing whether the old machine should be retained or replaced.

From the attached excel file, the following calculation are made:

Variable Manufacturing cost of Retain = Initial Variable Manufacturing cost * remaining useful life of old machine = $592,600 * 5 = $2,963,000

Variable Manufacturing cost of Replace = New Variable Manufacturing cost * Remaining useful life of new machine = $505,500 * 5 = $2,527,500

From the attached excel, it can be observed that the total cost of Retain is $32,200 higher than the total cost of Replace. This therefore implies that the old machine should be replaced.

Download xlsx

6 0

3 years ago

When a commercial for men's razor blades demonstrate how the blades work to create the closest shave, the brand is using a _____

Ivenika [448]

Answer:

a) Informational

Explanation:

The company is using informational appeal in its advertisement to convince the buyers that they need the product and shows how it works. . This type of appeal informs customers of the features, quality and benefits of a product. The demonstration of how the blades work helps the potential customers to make a rational decision as it it portrays that the blades' function of the providing the closest shave is what they need.

4 0

3 years ago