Problem 3-7 Balance Sheet Which of the following actions are most likely to directly increase cash as shown on a firm’s balance sheet? Explain and state the assumptions that underlie your answer. a. It issues $2 million of new common stock b. It buys new plant and equipment at a cost of $3 million c. It reports a large loss for the year d. It increases the dividends paid on its common stock The answer is (a.). Issuing $2 million of new common stock would increase the cash because stock
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Financial and Managerial Accounting M1-21 Applying the Accounting Equation and Computing Financing Proportions Use the accounting equation to compute the missing financial amounts (a)‚ (b)‚ (c). Which of these companies is more owner financed? Which of these companies is more non-owner financed? Discuss why the proportion of the owner financing might differ across these three businesses. ($ millions) Assets = Liabilities + Equity Hewlett Packard….$74‚708 = $36‚962 +
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First and foremost‚ Target’s ROE ratios for the last five years are experiencing ups and downs; it had lowest ROE ration of -0.108 for the period ending in 1/31/15‚ and the ROE was 0.25 for the period ending in 1/31/16. Except for the year ending in 1/31/15‚ Target generated profit in the last five years‚ and the increasing trend of ROE indicated that Target was succeeded in increasing efficiency without needing more capital. Although we cannot know from the analysis what lead to the great drop in
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Module 4 Analyzing and Interpreting Financial Statements Learning Objectives – coverage by question True/ False Multiple Choice Exercises Problems Essay Questions LO1 Compute return on equity (ROE) and disaggregate it into operating and nonoperating returns. 1-6 1-9 1-6 1-4 1-2 LO2 Disaggregate operating return (RNOA) into components of profitability and asset turnover. 1‚ 7-9 10-14 7-9 5-6 1-3 LO3 Explain nonoperating return and compute it from return on equity and the
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17 RATIO ANALYSIS FEATURING THE DUPONT METHOD: AN OVERLOOKED TOPIC IN THE FINANCE MODULE OF SMALL BUSINESS MANAGEMENT AND ENTREPRENEURSHIP COURSES Submitted by Thomas J. Liesz University of Idaho (208) 885-5447 (office) tliesz@uidaho.edu Steven J. Maranville University of Houston-Downtown One Main Street Houston‚ TX 77002-1001 (713) 221-8524 maranvilles@uhd.edu Submitted to Small Business Institute Journal The authors wish to acknowledge the valuable comments of two SBIJ reviewers
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the amount of earnings retained by the firm does not affect market price or the P/E. D. the firm can increase market price and P/E by retaining more earnings and increasing the growth rate. E. None of the options If required return and ROE are equal‚ investors are indifferent as to whether the firm retains more earnings or increases dividends. Thus‚ retention rates and growth rates do not affect market price and P/E. 23) The present value of growth opportunities (PVGO) is equal to
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Apparel‚ Accessories‚ and Luxury Goods 5. The common stock has a $0.0003 1/3 par value. 6. Under Armour has no preferred stock. 7. ROE for the last three years using average common equity in the denominator: 2013 2012 2011 ROE 0.174 0.177 0.171 Calculation 8. We cannot determine whether the firm is creating value for its stockholders based on the trend in ROE alone. This figure must be compared with the cost of equity capital in order to make a determination on value creation. However‚ just
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Analysis of Financial Statements Ratio Analysis DuPont Equation Potential Misuse of ROE Use Financial Ratios to performance Uses and Limitations of Financial Ratios • Ratios help us to evaluate financial statements. Ratios are used to make comparisons. • There are many different ratios‚ with different ones used to examine different aspects of the firm’s operations. • Ratios can be divided into 5 categories: 1. 2. 3. 4. 5. Liquidity ratios‚ Asset management ratios‚ Debt management ratios‚ Profitability
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emphases affect the ratios they focus on? Credit analyst for extending loans Stock analysts for buy and sell recommendations Managers to help manage the finances of the company Q-6 If a firm’s ROE is low and management wants to improve it‚ explain how using more debt might help. If the ROE is low you might borrow more money to increase your business. This is called financial leverage. Q-10 Indicate the effects of the transactions listed in the following table on total current assets‚
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calculate the programs ROI? a. If I was HR manager I would have looked at the sales data and financial data to see if the organization productivity had increased‚ also I would have looked at the cost of training. With all these combined I could look to see since the training had started if the company’s productivity has improved minus the cost of training as compared to the productivity of the company before training. The ROI formula can detect the benefits of training. Simply if ROI ratios is > 1 than
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