ADM 3350 M Winter 2010 CORPORATE FINANCE MIDTERM EXAMINATION – February 10th‚ 2010 Professor: Kaouthar LAJILI‚ PhD.‚ CGA Duration: 1 hour and 30 minutes Part I 15 Part II 35 TOTAL 50 NAME: __________________________________________ STUDENT #: ________________________ PART I: Multiple Choice Questions (15 points) Please circle the correct answer 1. In an EPS-EBI graphical relationship‚ the slope of
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2011 Return on Capital Employed 49.6 = 8.16% 107.3 =16.43% (PBIT/Total Assets-Current liabilities) 930.5 - 322.4 938.5 - 285.6 Return on Equity (ROE)
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5-2 (Q5-2) (a) Explain how an increase in financial leverage can increase a company’s ROE. (b) Given the potentially positive relation between financial leverage and ROE‚ why don’t we see companies with 100% financial leverage (entirely non-owner financed)? ROE is the sum of return on assets (ROA) and the return that results from the effective use of financial leverage (ROFL). Increasing leverage increases ROE as long as ROA exceeds the after-tax interest rate. Financial leverage is also related
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EXECUTIVE SUMMARY The Boston Beer Company operates on the sale of beer in the beer industry. The company’s financial statements from 2007 to 2011‚ has served for an analysis of company’s success in asset utilization‚ solvency‚ profitability‚ and liquidity. The company has demonstrated strong financial qualities pertaining to its solvency and profitability. Because Boston Beer Co. has no debt; the likelihood of them meeting expansion and growth goals is high. Consistency in incremental increases
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The Armstrong Production Company is an industry-leading firm in the field of manufacturing synthetic building materials for homes and commercial structures‚ based near St. Louis. Armstrong was fortunate in its initial stages to quickly secure inexpensive funding in the form of developmental loans issued by the State of Illinois‚ and thus was able to break even within three years of its founding in the early 1970s. Able to pour resources into its research and development segment‚ riding on the increasing
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firms with lower percentage of debt have higher value‚ Marriott uses this strategy to increase its value and thereby increase it profitability. Repurchase undervalued shares: By buying back its undervalued shares‚ Marriott can increase PE ration when needed and can make its investors’ holdings more valuable because share prices will increase (increase in ROE). It also can appease investors and avoid pressure to increase dividend‚ thereby it can use its retained earnings to invest more in profitable
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CHAPTER 12 QUESTIONS 12-1 Operating leverage affects EBIT and‚ through EBIT‚ EPS. Financial leverage generally has no effect on EBIT—it only affects EPS‚ given EBIT. 12-2 Because Firm A has a higher fixed operating costs‚ its operating income will change by a greater percentage than Firm B’s operating income if sales change. Firm A has a higher degree of operating leverage than Firm B. 12-3 If sales tend to fluctuate widely‚ then cash flows and the ability to service fixed charges
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Core Module_Grey 2 – Corporate Finance Corporate Finance Study Guide & Workbook Manchester Business School Accounting and Finance Division Original Thinking Applied Study Guide - FRONT COVER_New Format_Grey / 210 x 297mm / 4Cx0C / 3rd PROOF - 28 April 2011 Manchester Business School MBA Manchester Business School MBA Dr Arif Khurshed‚ Dr Susanne Espenlaub‚ Prof Norman Strong‚ Prof Ian Garrett‚ Dr Ning Gao and Dr Amedeo De Cesari Dr Arif Khurshed‚ Dr Susanne Espenlaub
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| | | Group Members:Yimeng (Emon) CHEN-A1169382Wenjing (Nancy) LAI – A1169890Yeqing LIN (Lyn) – A1169406Xutianli LIU(Cherry) – A1169401Xinxin NI (Cecilia) – A1169836 | | | May 2009 | | Financial Institutions Management II Group Assignment Project I: Performance Analysis Project II: Risk Analysis The year 2008 has seen extraordinary influences on the financial institutions. The original melt-down in the sub-prime market affect the credit market globally and severely‚ which
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Ratio – current share price divided by annual earnings per share: the multiple of earnings at which the stock currently sells can take other forms besides cash (e.g. stock dividends)‚ and many firms make cash distributions to shareholders via share repurchases. a Dividends & % ’ $ 3 A Quick Look At Dividends In Practice BT Financial Summary & % 3-1 From the BT Annual Report and Form 20-F‚ 2008 and 2005: Years ended 31 March In £m unless otherwise stated Basic earnings
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