Showing 71 to 80 of 175 Questions
  • Industry A is dominated by 10 large firms, each with sales of approximately $500 million per year. A proposal to merge two of these firms was approved by the Justice Department as not violating the antitrust laws. Industry B is locally defined and much smaller. It is dominated by three small firms, each selling about $50 million per year.

  • Integrity Group, an association of venture capitalists, is considering using a leveraged buyout to purchase Schrag Co., a well-established high-tech firm. Schrag has long-term debt with a book value of $15 million and a debt to equity ratio of 1:10. The firm’s stock is currently selling at 120% of book value. Integrity Group has $25 mil

  • Inventory management

  • Inventory management is a shared responsibility between finance and manufacturing just as receivables management involves both sales and finance. Right or wrong? Explain.

  • Is it true that most firms are able to obtain some free trade credit and that additional trade credit is often available, but at a cost? Explain.

  • Is there any reason to think that SKI may be holding too much inventory? If so, how would that affect EVA and ROE?

  • Jenkins Appliances has cash flow problems and needs to borrow between $50,000 and $60,000 for approximately sixty (60) days. Because the business is small and relatively new, unsecured loans are very hard to get and are expensive when they are available. The bank has offered such a loan at 25%. Climax Inc., a finance company, has offered

  • Lattig Corp. had a $2.0 million cash flow last year and projects that figure to increase by $200,000 per year for the next five years (to $3.0 million). After that, Lattig expects an annual growth rate of 6% forever. Assume the discount rate is 12%. a. What percent of the total present value of Lattig’s projected cash flows comes from i

  • Lee & Long, a clothing manufacturer, is considering filing for bankruptcy. The firm has EBIT of $1.4 million and long-term debt of $40 million on which it pays interest at an average rate of 8.5%. It also has fixed assets (gross) totaling $60 million. Depreciation averages 5% of gross fixed assets per year, and the long-term debt matures

  • Medwig Corporation has a DSO of 17 days. The company averages $3,500 in credit sales each day. What is the company’s average accounts receivable?

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