Questions and Answers of Principles Managerial Finance

Rimier Corp. forecasts sales of $650,000 for 2020. Assume that the firm has fixed costs of $250,000 and variable costs amounting to 35% of sales. Operating expenses are estimated to include fixed
In Shakespeare’s As You Like It, Rosalind—the lovesick heroine— wonders, “Can one desire too much of a good thing?” By “thing,” she specifically meant love, but the implied answer has
A February 2016 analyst report questioned whether the professional networking company LinkedIn was being run for the benefit of shareholders or management. The report noted that in the previous year
Home Health Inc. has come to Jane Ross for a yearly financial checkup. As a first step, Jane has prepared a complete set of ratios for fiscal years 2018 and 2019. She will use them to look for
Use the following 2016 financial information for ATT and Verizon to conduct a DuPont system of analysis for each company.a. Which company has the higher net profit margin? Higher asset turnover?b.
Given the following financial statements,historical ratios, and industry averages, calculate Sterling Company’s financial ratios for the most recent year. (Assume a 365-day year.)Analyze its
The financial statements of Zach Industries for the year ended December 31, 2019, follow.a. Use the preceding financial statements to complete the following table. Assume that the industry averages
Use the accompanying financial statements for Fox Manufacturing Company for the year ended December 31, 2019, along with the industry average ratios below, to do the following:a. Prepare and
McDougal Printing Inc. had sales totaling $40,000,000 in fiscal year 2019. Some ratios for the company are listed below. Use this information to determine the dollar values of various income
Financial information from fiscal year 2016 for two companies competing in the cosmetics industry—The Estée Lauder Companies and e.l.f. Beauty Inc.—appears in the table below. All dollar values
A common-size income statement for Creek Enterprises’ 2018 operations follows. Using the firm’s 2019 income statement presented in Problem 3–16, develop the 2019 common-size income statement
Using Tables 3.1, 3.2, and 3.3, conduct a complete ratio analysis of the Bartlett Company for the years 2018 and 2019. You should assess the firm’s liquidity, activity, debt, and profitability
The table below shows 2016 total revenues, cost of goods sold, earnings available for common stockholders, total assets, and stockholders’ equity for three companies competing in the bottled drinks
Springfield Bank is evaluating Creek Enterprises, which has requested a $4,000,000 loan, to assess the firm’s financial leverage and financial risk. On the basis of the debt ratios for Creek, along
The table below shows key financial data for three firms that compete in the consumer products market: Procter & Gamble, Colgate-Palmolive, and Clorox. All dollar values are in thousands.a.
The table below shows that Blair Supply had an end- of-year accounts receivable balance of $300,000. The table also shows how much of the receivables balance originated in each of the previous 6
Three companies that compete in the footwear market are Foot Locker, Finish Line, and DSW. The table below shows inventory levels and cost of goods sold for each company for the 2016, 2015, and 2014
Bauman Company’s total current assets, total current liabilities, and inventory for each of the past 4 years follow:a. Calculate the firm’s current and quick ratios for each year. Compare the
Listed are the equity sections of balance sheets for years 2018 and 2019 as reported by Mountain Air Ski Resorts Inc. The overall value of stockholders’ equity has risen from $2,000,000 to
Hayes Enterprises began 2019 with a retained earnings balance of $928,000. During 2019, the firm earned $377,000 after taxes. From this amount, preferred stockholders were paid $47,000 in dividends.
Hudson-Perry Recordings Inc. has one issue of preferred stock and one issue of common stock outstanding. Given their stockholders’ equity account that follows, determine the original price per
Conrad Air Inc. reported net income of $1,365,000 for the year ended December 31, 2020. Show how Conrad’s balance sheet would change from 2019 to 2020 depending on how Conrad “spent” those
Use the appropriate items from the following list to prepare Mellark’s Baked Goods balance sheet at December 31, 2019. Value (S000) at December 31, 2019 Value ($000) at December 31, 2019 Item Item
Everdeen Mining Inc. ended 2019 with a net profit before taxes of $436,000. The company is subject to a 40% tax rate and must pay $64,000 in preferred stock dividends before distributing any earnings
Adam and Arin Adams have collected their personal income and expense information and have asked you to put together an income and expense statement for the year ended December 31, 2019. You have
On December 31, 2019, Cathy Chen, a self employed certified public accountant (CPA), completed her first full year in business. During the year, she charged her clients $360,000 for accounting
Bluestone Metals Inc. is a metal fabrication firm that manufactures prefabricated metal parts for customers in a variety of industries. The firm’s motto is “If you need it, we can make it.” The
Cooper Industries Inc. began 2019 with retained earnings of $25.32 million. During the year, it paid four quarterly dividends of $0.35 per share to 2.75 million common stockholders. Preferred
Near the end of each quarter, many publicly traded companies unveil performance numbers in a Wall Street ritual known as “earnings season.” Interest is high as media outlets race to report the
In the United States, public companies must report financial results using GAAP. However, accounting standards vary around the world, and that makes comparing the financial results of firms located
What do the price/earnings (P/E) ratio and the market/book (M/B) ratio reveal about how investors assess a firm’s performance? What caveats must investors keep in mind when evaluating these ratios?
A firm’s ROE is typically not equal to its ROA. Why? When would a firm’s ROA equal its ROE?
A Brazilian company called Netshoes completed its IPO on April 12, 2017, and listed on the NYSE. Netshoes sold 8,250,000 shares of stock to primary market investors at an IPO offer price of $18, with
On April 13, 2017, Yext Inc. completed its IPO on the NYSE. Yext sold 10,500,000 shares of stock at an offer price of $11 with an underwriting discount of $0.77 per share. Yext’s closing stock
In late December you decide, for tax purposes, to sell a losing position that you hold in Twitter, which is listed on the NYSE, so that you can capture the loss and use it to offset some capital
Transaction costs You would like to purchase one Class A share of Berkshire Hathaway through your Scot trade brokerage account. Scot trade charges a $7 commission for online trades. You log into your
In May 2017, a federal jury convicted Doug DeCinces of insider trading for scoring nearly $1.3 million from a stock tip about a pending corporate acquisition. The tip came from a close friend who
What four ways do VCs use to organize their businesses? How do they structure and price their deals?
Describe the role of capital markets from the firm’s and investors’ perspectives. What is the efficient market hypothesis?
Describe the role of commercial banks, investment banks, and the shadow banking system within the financial market environment.
What are financial institutions? Describe the role they play within the financial market environment.
Michaels Corporation expects earnings before interest and taxes to be $50,000 for the current period. Assuming a flat ordinary tax rate of 35%, compute the firm’s earnings after taxes and earnings
Corporate taxes Tantor Supply, Inc., is a small corporation acting as the exclusive distributor of a major line of sporting goods. During 2017, the firm earned $92,500 before taxes.a. Calculate the
Accrual income versus cash flow for a period Thomas Book Sales, Inc., supplies textbooks to college and university bookstores. The books are shipped with a proviso that they must be paid for within
You have been made treasurer for a day at AIMCO, which develops technology for video conferencing. A manager of the satellite division has asked you to authorize a capital expenditure in the amount
During his January 11, 2017, press conference, President-elect Donald Trump berated reporter Jim Acosta and his employer, CNN, saying, “You are fake news.” For news organizations to question the
In a modern corporation, shareholders rely on management to oversee dayto- day operations. In this relationship, stockholders are principals and management their agents. Accordingly, the first duty

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