Question 2a: Discuss the importance of ratio analysis for inter-firm and intra-firm comparisons including circumstances responsible for its limitations .If any Answer: Ratio analysis implies the systematic use of ratios to interpret the financial statements so that the strength and weaknesses of a firm as well as its historical performance and current financial position can be determined. With the help of ratio analysis conclusion can be drawn regarding several aspects such as financial health‚
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Assignment #7 P13-7A (a) General Journal Date A/C Title Ref Debit Credit Feb 6 Cash 111‚000 Preferred Shares (1‚000 x $111) 111‚000 To record issue of 50‚000 preferred shares at $111 July 15 Preferred Shares (2‚000 x $106) 212‚000 Common Shares 212‚000 To record conversion of 2‚000 preferred shares into 16‚000 common shares at average cost of $106
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a well-known and famous stock amongst defensive investors‚ thanks to its long dividend growth history. Dividend and defensive investors like to invest in companies that have the potential to generate a steady growth in earnings and cash flows. Consequently‚ these companies usually offer increasing dividends and a steady share price appreciation. Emerson is a dividend aristocrat‚ as it has also paid increasing dividends since 1959. Albeit a long fairy tale‚ Emerson Electric has almost lost its shine
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Current‚ quick ratio - How capable is the business in meeting its short-term obligations as they fall due? 4 Stability ratios: eg. Gearing - How healthy is the business in the long-term financially? 5 Investor ratios: EPS‚ Price earning ratio‚ Dividend yield - Are the investors receiving sufficient return on their investment? Critical evaluation of the financial ratios Ratio analysis used with care‚ can reveal much about a company and its overall operations and image to stakeholders but there
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Xytech was a high-tech company that had been started by three partners in early 20X0. Their successful product designs led to rapid growth of the company‚ with resulting needs for additional capital to support the growth. This case describes the major financing transactions entered into by Xytech in its first 10 years of existence. The firm’s earnings history also is given. You are to write a journal entry for each transaction as it is described. You should be explicit about what noncurrent liability
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stock (2‚500 x $18) 45‚000 Cash paid for dividends (62‚125) Net cash used in financing activities (44‚720) Net decrease in cash ($ 22‚750) Cash balance at beginning of year 2011 76‚625 Cash balance at end of year 2011 $53‚875 Noncash investing and financing activities Purchased equipment for $96‚375 by signing a $71‚375 long-term note payable and paying $25‚000 in cash. Part 2 Kazaam Company dividend payments of $62‚125 represent 84% of the $73‚750
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competition. With Gainesboro’s financial strength in turmoil‚ CFO Ashley Swenson must submit a new dividend policy to the Board of Directors. She must decide whether more value will be added by paying shareholder dividends or to buy back company stock‚ the objective being to achieve a 15% compounded annual growth rate. Analysis: In order to create the most value for Gainesboro‚ Swenson must analyze what dividend policies will maximize share holders wealth while also minimizing the risk incurred by the
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voting‚ and they enjoy a first option to purchase new shares. The common stockholder is the last in line to receive payment but the stockholder’s potential participation is unlimited. Instead of getting a $1 dividend‚ the investor may someday receive many times that much in dividends and also capital appreciation in stock value. 7. Why might management use a poison pill strategy? A poison pill represents a rights offer made to existing shareholders of a company with the sole purpose of making
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| |X | | |F. Sold common stock | | |X | |G. Paid a cash dividend to stockholders | | |X | |H. Paid interest to lenders |X |
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income this year will be $3‚500‚000. If the company follows a residual dividend policy‚ what will be its total dividend payment? (a) $205‚000 (b) $500‚000 (c) $950‚000 (d) $2‚550‚000 (e) $3‚050‚000 Student Answer: Answer:(c) $3‚000‚000 $3‚500‚000 – $2‚550‚000=$950‚000 × 85% = $2‚550‚000. The firm has $3‚500‚000 of net income‚will be dividends. Instructor Explanation: Answer is: c Text: pp. 570-572 - Residual Dividends‚ Chapter 14 The amount of new investment which must be financed with
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