Entries by mary WAMBUGU

Rio Rubber Corporation follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm’s dividend per share?

August 26, 2019 in /by

Part 1 – Concept Questions (15 points each) 1. Rio Rubber Corporation follows a strict residual dividend policy. All else equal, which of the following factors would be most likely to lead to an increase in the firm’s dividend per share?             A. The company increases the percentage of equity in its target capital structure. […]

 

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Padre Inc. recently hired your consulting firm to improve the company’s performance.

August 26, 2019 in /by

11. Padre Inc. recently hired your consulting firm to improve the company’s performance. Padre has been highly profitable but has been experiencing cash shortages due to its high growth rate. As part of your analysis, you want to determine the firm’s cash conversion cycle and the firm’s cost of trade credit. 11.a Using the following […]

 

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The Tech Hardware Company is trying to estimate its optimal capital structure.

August 26, 2019 in /by

10. The Tech Hardware Company is trying to estimate its optimal capital structure. Tech’s current capital structure consists of 20% debt and 80% equity; however, management believes the firm should use more debt.  The risk-free rate is 1.3%, the market risk premium is 6%, and the firm’s tax rate is 35%.  Currently, Tech’s cost of […]

 

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If a company stated in its annual report to shareholders that it made efforts to recapitalize (that is, change the capital structure) to a higher amount of leverage, you could certainly look at the balance sheet to verify this. What other financial statement, the income statement or statement of cash flows, would also show evidence? Give an example of what the evidence might look like?

August 26, 2019 in /by

If a company stated in its annual report to shareholders that it made efforts to recapitalize (that is, change the capital structure) to a higher amount of leverage, you could certainly look at the balance sheet to verify this. What other financial statement, the income statement or statement of cash flows, would also show evidence? Give an […]

 

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