aiming at 16% after tax return and tax rate of 38%. Identification of Issues and related alternatives: • Debt to Equity Ratio of 1.23 more than 1 reveals that more than half of assets are financed by debt. • $3.6 million required for repairs of hull before 2013. • Gross profit of 60% has not increased much over past three years it will affect operating income if there is a decline in sales. • Operating profit of .23% in 2012 seems to decline from 2011 of .26% implies company earns less per dollar
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the impact be on the firm’s shareholders? The impact on shareholders can be analyzed by calculating the EPS and ROE of the firm under the alternative scenarios as follows: All Debt With $5‚000‚000 Expansion Current Growth in Revenues Revenues EBIT Interest EBT EBT*(1-T) # of shares EPS Debt Equity Debt/Equity Ratio Return on Equity 15‚000‚000 2‚250‚000 0 2‚250‚000 1‚350‚000 1‚000‚000 1.35 0 15‚000‚000 0.00% 9.00% Worst Case 10% 16‚500‚000 2‚475‚000 500‚000 1‚975‚000 1‚185‚000 1‚000‚000 1.185 5‚000
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Corporation -Earnings Before Interest & Tax - EBIT An indicator of a company ’s profitability‚ calculated as revenue minus expenses‚ excluding tax and interest. EBIT is also referred to as "operating earnings"‚ "operating profit" and "operating income"‚ as you can re-arrange the formula to be calculated as follows: |EBIT = |Revenue - Operating Expenses | Also known as Profit Before Interest & Taxes (PBIT)‚ and equals Net Income with interest and taxes added back
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[FINANCIAL PERFOMANCE OF ] NCC Bank Ltd. 1.0: INTRODUCTION 1.1: Origin of the report For this requirement of “Management of Financial Institution” we have prepare this report. We are also interested to know actual financial performance of NCC Bank Bangladesh Ltd. 1.2: Purpose The purpose of preparing this report is to focus on the financial performance of NCC Bank Bangladesh Ltd. Specifically; we have prepared this report to know About NCC Bank Bangladesh Ltd. Industry Analysis and SOWT Analysis
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through its cost of capital and can affect the share of the earnings that pertain to the equity shareholders. Introduction to Capital Structure Theories There are 4 basic Capital Structure theories. They are: 1. Net Income Approach 2. Net Operating Income Approach 3. Modigliani-Miller (MM) Approach and 4. Traditional Approach Generally‚ the capital structure theories have the following assumptions: 1. There are no corporate taxes (this assumption has been removed later). 2. The firms
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percent rate of interest) and $5‚000 in equity. Both firms sell 10‚000 units of output at $2.50 per unit. The variable costs of production are $1‚ and fixed production costs are $12‚000. (To ease the calculation‚ assume no income tax.) a) What is the operating income (EBIT) for both firms? Company A Company B Sales 25‚000.00 25‚000.00 Variable Expenses 10‚000.00 10‚000.00 Fixed Costs 12‚000.00 12‚000.00 EBIT 3‚000.00 3‚000.00 b) What are the earnings after interest? Company A
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Question 1 Examine BA’s Strategic decisions over the past 5 years and state what you consider to be the most crucial for the next 5 years. Give your reasons. The strategic decisions that they have taken for the last past 5 years can be given as follows. • A strong marketing campaign focusing on customer care. • Expanding their destinations & global connections. • Differentiated service levels that are offered to the customers. • Requirements & preferences for
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rate of interest) and $5‚000 in equity. Both firms sell 10‚000 units of output at $2.50 per unit. The variable costs of production are $1‚ and fixed production costs are $12‚000. (To ease the calculation‚ assume no income tax.) 1. What is the operating income (EBIT) for both firms? The operating income or “earnings before interest and taxes (EBIT) for both firms are: EBIT – 10‚000 * 2.5 – 10‚000 * 1 – 12‚000 = $3‚000 2. What are the earnings after interest? Firm A’s Earning s after
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Importance of the theories and implications on corporate financial decisions in Malaysia As business grows wider and complex across the border‚ there is a demand for better valuation tool to evaluate the performance of the business. It is important to adopt more innovative performance metrics so that the company’s management behaviors can be closely monitored to achieve the goal of maximizing the shareholders’ benefits. It is also important to access a firm’s value for any decision making regarding
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increasing as well as the net profit margin. Total Leverage: Unfavorable. The trend is positive because total leverage has increased most years. The higher number‚ the more debt a company has which means that the company has to pay a higher interest expense. Therefore‚ the net income will be lower which will in turn lower the net profit margin‚ affecting the ROA. Stockholders want ROE to increase‚ but not strictly due to the leverage increase. From 2008 to 2009 the total leverage of Netflix
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