Author: Anonymous

If the tax laws were changed so that 125% of total interest paid by a corporation (example, $125 tax-deductible interest expense for every $100 of interest expense) was allowed as a tax-deductible expense, companies would be encouraged to use more debt financing than they presently do, other things held constant.

Han Corp’s sales last year were $425,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay? Base your answer on this equation: DSO – Allowed credit period = Average days late, and use a 365-day year when calculating the DSO. Assume all sales to be on credit. Do not round your intermediate calculations.

The market/book (M/B) ratio tells us how much investors are willing to pay for a dollar of accounting book value. In general, investors regard companies with higher M/B ratios as less risky and/or more likely to enjoy higher growth in the future.

Precision Aviation had a profit margin of 7.00%, a total assets turnover of 1.5, and an equity multiplier of 1.8. What was the firm’s ROE?

Financial institutions are more diversified today than they were in the past, when federal laws kept investment banks, commercial banks, insurance companies, and similar organizations quite separate. Today the larger financial services corporations offer a variety of services, ranging from checking accounts, to insurance, to underwriting securities, to stock brokerage.

A decline in a firm’s inventory turnover ratio suggests that it is improving both its inventory management and its liquidity position, i.e., that it is becoming more liquid.

Beranek Corp has $625,000 of assets (which equal total invested capital), and it uses no debt—it is financed only with common equity. The new CFO wants to employ enough debt to raise the total debt to total capital ratio to 40%, using the proceeds from borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio?

Considered alone, which of the following would increase a company’s current ratio?

Rao Construction recently reported $19.00 million of sales, $12.60 million of operating costs other than depreciation, and $3.00 million of depreciation. It had $8.50 million of bonds outstanding that carry a 7.0% interest rate, and its federal-plus-state income tax rate was 25%. What was Rao’s operating income, or EBIT, in millions?

Assume that  x  and  y  are both differentiable functions of  t  . Find  when  and  for the equation. ​