1. Using the Practice Cash Flow from Assets Balance Sheet and Income statement for 2021: a....
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
1. Using the Practice Cash Flow from Assets Balance Sheet and Income statement for 2021: a. Find the retention ratio b. Find Return on Assets c. Find Return on Equity d. Find the Internal Growth Rate e. Find the Sustainable Growth Rate f. Find the Debt to Equity Ratio g. Find the Equity Multiplier 2. Grow the balance sheet by the internal growth rate and assume that net income grows by the same percentage. Keep the retention ratio the same. a. How many new assets are needed? b. How much is being added to retained earnings? c. Compare what is being added to retained earnings to the level of new assets. 3. Grow the balance sheet by the sustainable growth rate and assume that net income grows by the same percentage. Keep the retention ratio the same. a. How many new assets are needed? b. How much is being added to retained earnings? c. How much external financing is needed? d. Use long term debt to fund the external financing needed and recalculate the debt to equity ratio. e. Has the debt to equity ratio increased, decreased or stayed the same? 4. Add 1% to the Internal Growth rate found above (e.g., if the Internal Growth Rate is 5%, use 6%). Increase net income by that percentage and do not change the retention ratio. a. How many new assets are needed? b. How much is being added to retained earnings? c. Is any external financing needed? d. If external financing is needed, use long term debt and calculate the new debt to equity ratio. e. Has the debt to equity ratio increased, decreased or stayed the same? 1. Using the Practice Cash Flow from Assets Balance Sheet and Income statement for 2021: a. Find the retention ratio b. Find Return on Assets c. Find Return on Equity d. Find the Internal Growth Rate e. Find the Sustainable Growth Rate f. Find the Debt to Equity Ratio g. Find the Equity Multiplier 2. Grow the balance sheet by the internal growth rate and assume that net income grows by the same percentage. Keep the retention ratio the same. a. How many new assets are needed? b. How much is being added to retained earnings? c. Compare what is being added to retained earnings to the level of new assets. 3. Grow the balance sheet by the sustainable growth rate and assume that net income grows by the same percentage. Keep the retention ratio the same. a. How many new assets are needed? b. How much is being added to retained earnings? c. How much external financing is needed? d. Use long term debt to fund the external financing needed and recalculate the debt to equity ratio. e. Has the debt to equity ratio increased, decreased or stayed the same? 4. Add 1% to the Internal Growth rate found above (e.g., if the Internal Growth Rate is 5%, use 6%). Increase net income by that percentage and do not change the retention ratio. a. How many new assets are needed? b. How much is being added to retained earnings? c. Is any external financing needed? d. If external financing is needed, use long term debt and calculate the new debt to equity ratio. e. Has the debt to equity ratio increased, decreased or stayed the same?
Expert Answer:
Related Book For
Cost Management A Strategic Emphasis
ISBN: 978-0077733773
7th edition
Authors: Edward Blocher, David Stout, Paul Juras, Gary Cokins
Posted Date:
Students also viewed these finance questions
-
The 2009 balance sheet and income statement for the Woods Company are shown here: Woods Company: Income Statement for the Year Ending December 31, 2009 ($ thousands)...
-
Compute the required rate of return using the CAPM and the following information: Beta = .85 Expected return on the market = 9% Risk-Free Rate = 1.50% a. 7.50% b. 7.88% c. 9% d. 1.50% e. 7.65%
-
9:49 X Bank Reconciliation Assignment 1 PDF 150 KB Assignment #1 - Bank Reconciliation This assignment has 33 total marks. This assignment is worth 5% of your final grade. This assignment is due...
-
Product TS-20 has revenue of $102,000, variable cost of goods sold of $52,500, variable selling expenses of $21,500, and fixed costs of $35,000, creating a loss from operations of $7,000. Prepare a...
-
Can you think of a reason why metals exhibit the photoelectric effect most easily? (Do you see any connection between this phenomenon and the properties of a good electrical or thermal conductor?)
-
Which types of economic damages are related to digital crimes?
-
American Auto is evaluating their marketing plan for the sedans, SUVs, and trucks they produce. A TV ad featuring this SUV has been developed. The company estimates that each showing of this...
-
The half-life of a certain brand of ice cream is 180 minutes. a. Find the decay rate of the ice cream. (6 decimal places) b. How long will it take for it to decay to 60% of the original amount. c. At...
-
Exercise 9-3 (Cash Dividends) The shareholders' equity section of the statement of financial position of FGH Company shows the following as of January 1, 2010: Ordinary share capital, P100 stated...
-
Suppose the expected returns and standard deviations of A and B are E(R A ) = 0.15, E(R B ) = 0.25, A = 0.40, and B = 0.65, respectively. (a) Calculate the expected return and standard deviation of...
-
The Wheatchopper Company is considering the purchase of a new harvester. Wheatchopper has hired you to determine the break-even purchase price in terms of present value of the harvester. This...
-
You own an unused gold mine that will cost $800,000 to reopen. If you open the mine, you expect to be able to extract 1,000 ounces of gold a year for each of 3 years. After that, the deposit will be...
-
Grace and Danger plc is introducing a new product this year. If its luminous golf balls (with integrated beeper) are a success, the firm expects to be able to sell 50,000 units a year at a price of...
-
Calculating Returns Suppose you bought an 8 per cent coupon bond one year ago for 1,200. The bond sells for 1,074 today. (a) Assuming a 1,000 face value, what was your total euro return on this...
-
A sand having an initial porosity of 37% is loaded isotropically to 500 psi. At this load, e=0.29 and the sand occupies a volume of 73 cm^3. what was the inital volume of sand?
-
Imagine you are the HR manager at a company, and a female employee came to you upset because she felt a male coworker was creating a hostile work environment by repeatedly asking her out on dates...
-
Cardio World Inc. (CWI) is a sporting goods retailer that specializes in bicycles, running shoes, and related clothing. The firm has become successful by careful attention to trends in cycling,...
-
A recent research study investigated whether or not the ethical judgment of an accountant would be affected by the pattern of unethical behavior-gradual, or at a single point in time. Specifically,...
-
A number of ethical issues arise in the design of management control systems. For example, such issues might arise when an individual's performance relative to budget or standard cost affects the...
-
Design a fast LOT-based filter bank with at least eight sub-bands.
-
Prove the relationship in Equation (9.210). CC2=CC = 0, (9.210)
-
Show that the relations in Equations (9.256)-(9.258) are valid. E(z) = [C3+2 (I - 3)]4. (9.256)
Study smarter with the SolutionInn App