Explain why the following statement is true: “Other things being equal, firms with relatively stable sales are able to carry relatively high debt/assets ratios.”
Answer to relevant QuestionsExplain how a firm might shift its capital structure so as to change its weighted average cost of capital (WACC). What would be the impact on the value of the firm?The firms HL and LL are identical except for their debt-to-total-assets ratios and interest rates on debt. Each has $20 million in assets, earned $4 million before interest and taxes, and has a 40 percent marginal tax rate. ...In 2015, the Sirmans Company paid dividends totaling $3,600,000 on net income of $10.8 million. The year 2015 was a normal one for the company, and for the past 10 years, earnings have grown at a constant rate of 10 percent. ...After a 5-for-1 stock split, the Swenson Company paid a dividend of $0.75 per new share, which represents a 9 percent increase over last year’s presplit dividend. What was last year’s dividend per share?Why is it important for a financial manager to understand the concept of float to effectively manage the firm’s cash?
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