Finacial

In: Business and Management

Submitted By smallwonder2003
Words 627
Pages 3
FIN 534 Homework for Chapter 3 1. Which of the following statements is CORRECT? a. The ratio of long-term debt to total capital is more likely to experience seasonal fluctuations than is either the DSO or the inventory turnover ratio. b. If two firms have the same ROA, the firm with the most debt can be expected to have the lower ROE. c. An increase in the DSO, other things held constant, could be expected to increase the total assets turnover ratio. d. An increase in the DSO, other things held constant, could be expected to increase the ROE. e. An increase in a firm’s debt ratio, with no changes in its sales or operating costs, could be expected to lower the profit margin. 2. Companies HD and LD have the same tax rate, sales, total assets, and basic earning power. Both companies have positive net incomes. Company HD has a higher debt ratio and, therefore, a higher interest expense. Which of the following statements is CORRECT? f. Company HD has a lower equity multiplier. g. Company HD has more net income. h. Company HD pays more in taxes. i. Company HD has a lower ROE. j. Company HD has a lower times interest earned (TIE) ratio. 3. Companies HD and LD have the same total assets, sales, operating costs, and tax rates, and they pay the same interest rate on their debt. However, company HD has a higher debt ratio. Which of the following statements is CORRECT? k. Given this information, LD must have the higher ROE. l. Company LD has a higher basic earning power ratio (BEP). m. Company HD has a higher basic earning power ratio (BEP). n. If the interest rate the companies pay on their debt is more than their basic earning power (BEP), then Company HD will have the higher ROE. o. If the interest rate the companies pay on their debt is less than their basic…...

Similar Documents

Personal Finacials

...Current Economic State Essentials of Personal Finance Keyshunda Howard University of Phoenix November 18, 2012 Abstract As I began my research I found chief economist Jan Hatzius of the Global Investment Research talk about how the economy is expanding but at a slow rate. The current prime rate for the Wall Street Journal was reported to be 3.25% as of November 14, 2012. The Federal Discount Rate was 0.75,% and the 11th District Cost of Funds was at 1.038 and all of these were updated on the 14th of November. The current interest rates on a fixed credit card stand at 14.0%2 and variable credit cards interest rates are reported to be 14.59%. The United States unemployment rate has increased to 7.9% percent as of October of 2012. As for the state of Alabama the unemployment rate has dropped to 8.1%. The inflation rate had dropped down to 2.16% compared to what it was a year ago. The Gross Domestic Product was at 15775.7% as of November 14, 2012. Based on my study the different rates of the economy can influence a personal financial choice because it can help a person with their planning when it comes to buying a home, a car, or even starting a family. It is good to have credit cards but it is very important to know what the different rates are. When knowing what the rates are can help a person when it comes to buying thing...

Words: 294 - Pages: 2

Finacial Derivatives

...Demystifying T 20 The Milken Institute Review The Merriam-Webster dictionary defi nes a derivative in the fi eld of chemistry as “a substance that can be made from another substance.” Derivatives in fi nance work on the same principle. These fi nancial instruments promise payoffs that are derived from the value of something else, which is called the “underlying.” The underlying is often a fi nancial asset or rate, but it does not have to be. For example, derivatives exist with payments linked to the S&P 500 stock index, the temperature at Kennedy Airport, and the number of bankruptcies among a group of selected companies. Some estimates of the size of the market for derivatives are in excess of $270 trillion – more than 100 times larger than 30 years ago. When derivative contracts lead to large fi nancial losses, they can make headlines. In recent years, derivatives have been associated with a few truly notable events, including the collapses of Barings By René M. Stulz Financial Derivatives Third Quarter 2005 21 Bank (the Queen of England’s primary bank) and Long-Term Capital Management (a hedge fund whose partners included an economist with a Nobel Prize awarded for breakthrough research in pricing derivatives). Derivatives even had a role in the fall of Enron. Indeed, just two years ago, Warren Buffett concluded that “derivatives are fi nancial weapons of mass destruction, carrying dangers that, while now latent, are potentially......

Words: 5924 - Pages: 24

Finacial System

... Introduction: Economic growth and development of any country depends upon a well-knit financial system. Financial system comprises, a set of sub-systems of financial institutions financial markets, financial instruments and services which help in the formation of capital. Thus a financial system provides a mechanism by which savings are transformed into investments and it can be said that financial system play an significant role in economic growth of the country by mobilizing surplus funds and utilizing them effectively for productive purpose. The financial system is characterized by the presence of integrated, organized and regulated financial markets, and institutions that meet the short term and long term financial needs of both the household and corporate sector. Both financial markets and financial institutions play an important role in the financial system by rendering various financial services to the community. They  operate in close combination with each other. Financial System; |[pic] | The word "system", in the term "financial system", implies a set of complex and closely connected or interlined institutions, agents, practices, markets, transactions, claims, and liabilities in the economy.  The financial system is concerned about money, credit and finance-the three terms are intimately related yet are somewhat different from each other. Indian financial system consists of financial market...

Words: 1571 - Pages: 7

Hcs577 Finacial Data Analysis

...Pay-for-Performance HCS/531 January 28, 2013 Jody Sklar Pay-for-Performance Emergence of Pay-for-Performance In 2000, the Institute of Medicine (IOM) released the report “To Err is Human: Building a Safer Health System.” The report catalyzed the attention of health care stakeholder groups in the nation (Stafford, 2000). The research provided a comprehensive, detailed account of health care errors and preventable deaths costing billions of unnecessary dollars in a health care system already spiraling out of control. The IOM recommended that Congress create a Center for Patient Safety within the Agency for Health Care Research and Quality for the purpose of designing a safer health care delivery system. Fifteen months after releasing the patient safety report, the IOM released “Crossing the Quality Chasm.” The report framed underlying reform necessary in the current health care delivery system to ensure patient safety. The framework sought to hold providers accountability for the quality of care they deliver. The introduction of the pay for performance (P4P) as opposed to the prior fee for service and prospective reimbursement guidelines induces delivery of care based upon performance measures. Broadly defined pay-for- performance includes any type of performance-based provider payment arrangements, including those that target performance on cost measures (U.S. Department of Health & Human Services, 2006) Reimbursement Pay-for-performance,......

Words: 1852 - Pages: 8

Personal Finacial

...------------------------------------------------- University of Phoenix Material Personal Financial Planning Worksheet Directions Based on your readings and discussions in class this week, answer the following multiple choice questions. 1. The process of creating a detailed plan to meet your financial needs and prepare for the future is called a. developing goals b. personal financial planning c. collecting financial information d. personal finance 2. Which of the following is not one of the five major steps of the financial planning process? e. Analyze your current finances. f. Establish and implement your plan. g. Collect and organize your financial information. h. Reevaluate and revise your plan as needed. 3. Which phase in life is commonly associated with focus on marriage, family, purchasing a home, and career development? i. Teenage years j. Between your 50s and 60s k. Late 20s through your 40s l. During retirement 4. Which of the following is a benefit of having a college degree that can affect your financial planning? m. The potential to make a higher salary n. Jobs with retirement plans and benefits o. The ability to receive promotions and wage increases p. All of the above 5. Which of the following elements of a comprehensive financial plan involves analyzing future needs, such as saving for retirement or...

Words: 515 - Pages: 3

Finacial

...An indication of a company's ability to meet short-term debt obligations; the higher the ratio, the more liquid the company is. Current ratio is equal to current assets divided by current liabilities. If the current assets of a company are more than twice the current liabilities, then that company is generally considered to have good short-term financial strength. If current liablities exceed current assets, then the company may have problems meeting its short-term obligations. For example, if XYZ Company's total current assets are $10,000,000, and its total current liabilities are $8,000,000, then its current ratio would be $10,000,000 divided by $8,000,000, which is equal to 1.25. XYZ Company would be in relatively good short-term financial standing. And according to the information of Morgan company and Parker company, by comparing the two companies the current ration of Morgan it shows that Morgan in each year increases liabilities while Parker increases assets and so in meeting current obligations it seems that parker is able to increase his current obligations than Morgan because in each year he increases assets and reduces liabilities than Morgan who increases liabilities more than assets! Acidic test ratio is a stringent indicator that determines whether a firm has enough short-term assets to cover its immediate liabilities without selling inventory. The acid-test ratio is far more strenuous than the working capital ratio, primarily because the working capital ratio...

Words: 955 - Pages: 4

Complexities of the Us Finacial System

...Assignment One: Complexities of the U.S. Financial System Christine Capell Professor.Umair Warsi FIN 100 - Principles of Finance May 5, 2013 The US financial markets impact the economy, businesses, and individuals in a variety of ways, one of which is providing a way for businesses to raise capital by issuing securities. The capital markets enable new companies to raise funds to grow. Typically, banks would not lend in these situations because of the lack of sufficient collateral and high risk. Without the public securities markets or private venture capitalists to provide the funding for these higher risk investments, the economy would be much smaller. The markets and the economy are closely linked and are especially reactionary to the each other, i.e. if the economic indicators show recession, the markets typically turn down, particularly the equity markets. Currency markets, FOREX or foreign-exchange markets, and the mortgage markets will move in response to the health of the economy and the movement of interest rates. Should those economic indicators prove to be positive, then the markets turn upwards or even “fly”. When the markets experience an intense downtown, it can lead to a severe recession with the prices of financial assets declining sharply, which can cause individuals, businesses, and financial institutions to become less able to handle their debt payments or it can even lead to financial system failure with widespread bank closures and mortgage......

Words: 1364 - Pages: 6

Finacial Management

...Examination Paper of Financial Management IIBM Institute of Business Management 1 IIBM Institute of Business Management Examination Paper MM.100 Financial Management Subject Code-B-103 Section A: Objective Type & Short Questions (30 marks)  This section consists of multiple choice & Short Notes.  Answer all the questions.  Part One carries 1 mark each & Part two carries 5 marks each. Part one: Multiple choices: 1. The approach focused mainly on the financial problems of corporate enterprise. a. Ignored non-corporate enterprise b. Ignored working capital financing c. External approach d. Ignored routine problems 2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated period. a. Cumulative preference shares b. Non-cumulative preference shares c. Redeemable preference shares d. Perpetual shares 3. This type of risk arises from changes in environmental regulations, zoning requirements, fees, licenses and most frequently taxes. a. Political risk b. Domestic risk c. International risk d. Industry risk 4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment proposal. a. Future cost b. Specific cost c. Spot cost d. Book cost 5. This concept is helpful in formulating a sound & economical capital structure for a firm. a. Financial performance appraisal b. Investment evaluation c. Designing optimal corporate capital structure d. None of the......

Words: 1607 - Pages: 7

Finacial Aid

...C To: Financial Aid Committee Aloha, this letter is regarding the suspension of my financial aid. I am shocked to hear that my financial aid has been put on suspension. The reason it has been put on suspension, was because of the grade I received for my Intro to Communications class I took in spring 2013. After reading this letter of explanation I hope you will reconsider my suspension. I had the opportunity of taking this college class through a high school program I was in called Academy of Hospitality and Tourism. Only a selected few are able to take part in this program. They have to maintain a high GPA, and have a good attendance record. I met all those requirements and was able to take part in this program. Our senior year, this program allowed us to take skip our last period of the day and attend a college class. We were able to gain the college experience and get ahead. So I was taking a college class while still attending high school. I was doing very well in all my classes, I attended my classes everyday met all deadlines. I did really well in class. But towards the middle of the semester my parents had got a disturbing phone call from Sri Lanka. They were told that my grandmother was in the hospital, and that she was very ill. Family in Sri Lanka told us that we should “visit before it’s too late” My grandmother had a stroke several years ago, and lost her speaking ability. So it’s been hard for my parents not being able to see her every day. Listening......

Words: 833 - Pages: 4

Finacial Performance

...Impact of Profitablity on Growth: consumer packaged goods (CPG) INTRODUCTION Economic recovery remains vulnerable on all fronts a top-performing company analysis Getting on the global map Introduction Sales and income growth can be expected to influence rate of return and market value measures in both simulated and actual industries. It is unclear if growth in one year will affect profitability and market value measures in a succeeding year in simulated and actual environments. Asset growth, which can be used as a proxy for plant and equipment expenditures, and research intensity, may also affect sales and income growth in a base year or succeeding year, indirectly affecting profitability and market value. These direct and indirect effects may be different in simulated and actual industries, but if students are to learn from simulations there should be a reasonable correspondence between variable effects in simulated environments and real world industries. Recently, value based planning and performance measurement has been receiving more attention in business literature and in actual practice, since it provides a framework for using firm value as a strategic performance measures and focuses on profitability and growth as determinants of firm value (Varaiya, Kerwin, and Weeks, 1987). Many analysts and company executives believe that shareholder value (e.g., stock appreciation + dividends) is a better measure of long term corporate performance than......

Words: 681 - Pages: 3

Outline Finacial

...On-Line Web Based E-Grade Exam Management System Introduction: This Aim of this project is to produce an On-Line Web Based Exam Management System to help in the exam marks submission and the generation of the final results. The system would also be used to aid in preparing course mark reports to be presented before the examination board meeting for discussion and approval. When module tutors have all marks ready, they submit the marks for the module components to the system. Once they are in the system and after ratification by the exam board, the marks may be made available for students for viewing below Functional requirements. Web-based Application Functional Requirements: * On-line EMS System deals with all kind of student details, academic related reports, course details, curriculum, batch details and other resource related details too. * This program can facilitate us explore all the activities happening in the college, even we can get to know which teacher / faculty is assigned to which batch, the current status of a batch, attendance percentage of a batch and upcoming requirements of a batch. * Different reports and Queries can be generated based of vast options related to students, batch, course, teacher / faculty, exams, semesters, certification and even for the entire college. * Extensive information is available at your fingertips through this System. Viewing student data, managing admission and reshuffling ,managing seats, quota, board,......

Words: 2508 - Pages: 11

Finacial Management

...Examination Paper of Financial Management IIBM Institute of Business Management Examination Paper Financial Management Subject Code-B-103 Section A: Objective Type & Short Questions (30 marks)    This section consists of multiple choice & Short Notes. Answer all the questions. Part One carries 1 mark each & Part two carries 5 marks each. MM.100 Part one: Multiple choices: 1. The approach focused mainly on the financial problems of corporate enterprise. a. Ignored non-corporate enterprise b. Ignored working capital financing c. External approach d. Ignored routine problems 2. These are those shares, which can be redeemed or repaid to the holders after a lapse of the stipulated period. a. Cumulative preference shares b. Non-cumulative preference shares c. Redeemable preference shares d. Perpetual shares 3. This type of risk arises from changes in environmental regulations, zoning requirements, fees, licenses and most frequently taxes. a. Political risk b. Domestic risk c. International risk d. Industry risk 4. It is the cost of capital that is expected to raise funds to finance a capital budget or investment proposal. a. Future cost b. Specific cost c. Spot cost d. Book cost 5. This concept is helpful in formulating a sound & economical capital structure for a firm. a. Financial performance appraisal b. Investment evaluation c. Designing optimal corporate capital structure d. None of the above IIBM Institute of Business Management 1 Examination Paper of......

Words: 1608 - Pages: 7

Finacial Accounting

...Abstract This paper will analyze if the practice of earnings management through the use of deferred maintenance is ethical. The paper will analyze if the practice of earnings management through the use of deferred maintenance is allowed in the United States. This paper will analyze how United States generally accepted accounting principles (GAAP) differ in the treatment from International GAAP. Ethics is basically being able to distinguish between right and wrong. When I was in the Army, ethics was defined as simply doing what is right even when no one is looking or checking. Ethics in accounting is a form of professional ethics. The nature of the work done in accounting can affect the livelihood of all those connected to a business. Accurate and ethical accounting practices are crucial to a company. Earnings management is a process in which companies manipulate earnings to match a pre-determined target amount. The purpose is known as “income smoothing” and the intent is to keep earnings stable over a period of time (Investopedia, 2014). Practices like a company’s use of reserves for deferred maintenance are also known by the disingenuous accounting practice called cookie jar accounting or reserves (Investapedia, 2014). This practice is not ethical because it misleads investors on the company’s performance if there is not full disclosure of the company’s financial picture. In the United States, the SEC typically......

Words: 266 - Pages: 2

Finacial Training

...2. State two generally accepted accounting principles that relate to adjusting the accounts. Two generally accepted accounting principles that relate to adjusting the accounts are the Revenue Recognition principle and the Matching Principle. 3. Rick Marsh, a lawyer, accepts a legal engagement in March, performs the work in April, and is paid in May. If Marsh’s law firm prepares monthly financial statements, when should it recognize revenue from this engagement? Why? Rick Marsh should recognize revenue in the accounting period in which it is earned. Under the revenue recognition principle Rick earns revenue in April when he performs the works rather than in May when he is paid. So Rick should report a receivable on his balance sheet and revenue on his income statement at the end of April. 4. Why do accrual-basis financial statements provide more useful information than cash-basis statements? Accrual basis financial statement record transaction in the period in which the events occur. The financial statements help determines net income and can help companies recognize revenues when it is earned rather than when they receive cash. Accrual basis financial statements also recognize expenses when incurred rather than paid. Cash basis statements record revenue when they receive cash or if at all. 8. Distinguish between the two categories of adjusting entries, and identify the types of adjustments applicable to each category. Deferral 1. Prepaid Expenses.......

Words: 640 - Pages: 3

Finacial Planning

...PROJECT WORK -- GUIDELINES 1.1 WHY PROJECT WORK? Project Work is the best way to practice what you have learnt. The purpose of including project report in the Diploma Programme is to provide you an opportunity to investigate a problem applying management concepts in a scientific manner. It enables you to apply your conceptual knowledge in a practical situation and to learn the art of conducting a study in a systematic way and presenting its findings in a coherent report. As managers, you are constantly seeking information to base your decision. How well you collect, synthesize and make the data meaningful is what you learn through this process. 1.2 WHAT IS A PROJECT? A project is a scientific and systematic study of real issue or a problem intended to resolve the problem with application of management concepts and skills. The study can deal with a small or a big issue in a division or an organization, the problem can be from any discipline of management. It can even be a case study where a problem has been dealt with through the process of management. The essential requirement of a project is that it should entail scientific collection, analysis and interpretation of data leading to valid conclusions. 1.2.1 How to undertake Project Work? Step I – Select a suitable topic, prepare synopsis and submit it online to IMT - CDL, Ghaziabad for approval. Step II – Once the approval is received you can start project work. Thereafter project report should be prepared and...

Words: 1144 - Pages: 5