Revenue | $ 6‚000 | Operating Expenses | $ (4‚500) | EBIT (Operating Profit) | $ 1‚500 | | | Debt | $ 1‚200 | Equity | $ 8‚800 | Total Capital | $ 10‚000 | Interest rate on debt = 9% Share price = $25 (MV = BV) The firm is contemplating a leveraged share repurchase that would increase the Debt/Total Capital ratio from the current 12% to 60%. Hayfin’s tax rate is 42%. Calculate EPS‚ Times Interest Earned (TIE = EBIT/Interest
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|35.3 days |20.46 days | |Total asset turnover |1.09 |1.47 | |Debt ratio |.300 |.55 | |Time interest earned ratio |12.3 |8
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Robinson English explains how college students acquire debt‚ penalties‚ bad credit‚ and finical ruins before their graduation from the use of credit cards‚ student loans‚ and poor money management skills. Where college students with no knowledge money management and no financial responsibility unknowingly sign up for numerous credit cards with no limit spending from credit card companies ‚ whom prey on them knowing that they have no idea about the debt they have put themselves into without their money
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However‚ UST faces business risks including eroding market share‚ tobacco lawsuits‚ and reduction in innovation. UST Inc. is considering a leveraged recapitalization to help in shielding the tax‚ increasing the share price and eliminating idle cash and debt
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the international debt crisis and country risk. Learning Objectives: 1* Describe how international banking activities and their regulations have evolved Describe the interaction between public and private sector borrowing and balance of payments developments 2* Discuss the history and evolution of the Eurocurrency market and analyze how its presence affects a typical bank’s balance sheet 3* List the major developments in the area of risk‚ especially international debt crisis 4* Identify
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operating margin. If ROA is sound and debt levels are reasonable‚ a strong ROE is a solid signal that managers are doing a good job of generating returns from shareholders’ investments. Increasing sales and assets may also increase the debt of the company. Therefore‚ Star River needs more concern about the growth of profitability without taking too much debt. We analysis the financial leverage of the company‚ it shows that the debt to capital ratio and debt to equity ratio had an upward trend between
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Assignment No. 2 Determinants of capital structure In finance‚ capital structure refers to the way a corporation finances its assets through some combination of equity‚ debt‚ or hybrid securities. A firm ’s capital structure is then the composition or ’structure ’ of its liabilities. Simply‚ capital structure refers to the mix of debt and equity used by a firm in financing its assets. The capital structure decision is one of the most important decisions made by financial management. The capital structure
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analysis NPV analysis Findings 1. The strengths and draws of debt financing Burns and Irvine can maintain 100% ownership of this company using debt financing. Their obligations are payment of principal and interests and they can run business without considering others’ suggestions‚ that is‚ they own much more freedom of operations. Secondly‚ debt financing can receive the advantage of tax deduction. But the drawbacks of debt financing are obvious. The owner should pay the principal and interests
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collateral to the debts. Large cash flows continued and they decided to put up other unrelated ventures‚ such as a restaurant‚ automobile dealership‚ jewelry shop and many more. Much of the funds available for servicing the debts were used as capital in other businesses. Unfortunately‚ problems bursts as not all the Picaches’ enterprises were doing well‚ in addition‚ devaluation of dollar set in and there is lack of management of the company’s debt problems. To settle the debts‚ the mortgaged properties
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30% debt | 50% debt | 70% debt | EBIT | 954.8 | 922.2 | 922.2 | 922.2 | Interest | 2.3 | 52.7 | 87.8 | 122.9 | DFL | 1.0024 | 1.0606 | 1.1052 | 1.1538 | The larger the DFL‚ the larger the financial risks Potential value: The potential value American Home Products can create is the tax shield. Tax shield=Debt*Tax rate=Interest/Interest rate*Tax rate * 30%: 52.7m/.14*0.48=180.686m * 50%: 87.8m/.14*0.48=301.029m * 70%: 122.9m/.14*0.48=421.371m 2. Recommend: 30% debt to Total
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