The tendency of the return on stockholders' equity to vary disproportionately from the return on total assets is because of a. leverage b. solvency c. Yield d. quick assets

Q: It is assumed that the Cost of equity and rate of return are both constant under Walter’s Model of…

A: Solution:- Walter’s Model of Dividend is a relevant dividend model, which implies that the dividend…

Q: Which of the following does NOT directly affect a company's cost of equity? Select one: a. Return…

A: The capital asset pricing model (CAPM) describes the relationship between the expected return and…

Q: If the debt component in the capital structure is predominant –

A: Debt: It is a part of the capital structure that involves bonds, loans, etc. Introducing debt to the…

Q: How is the short term debt repayment capacity of a company is assessed ? Choose the INCORRECT OPTION…

A: Current ratio is the ratio of current assets to the current liabilities.

Q: (D/D+E)kd(1-T) + (E/D+E)k2 is also known as

A: The answer and the explanation is provided below:

Q: For purposes of computing the WACC, if the book value of equity exceeds the market value of equity,…

A: WACC is the weighted average cost of capital of the capital sources of a firm. It includes equity,…

Q: If the generated income cash of  some company were used to buy back common stock,thus reducing the…

A: Return on equity means the profit as percentage on equity. Equity means the owner funds. Return on…

Q: risk implications of improving net profit margin to increase Return on Equity?

A: Net profit margin is the percentage of net profit to sales revenue

Q: Which TWO of the following are possible effects of rising prices upon financial statements?…

A: We have the following question: Which TWO of the following are possible effects of rising prices…

Q: Which of the following statements is most correct?(a) P/E ratios are higher for firms with high…

A: The question is based on the concept of market value and book value of shares. Price to earnings…

Q: tatement is true b. The above sta

A: Explanation : In simple words, fixed incomes instruments like bonds and notes pays their holders a…

Q: The PE ratio a. Measures a company’s profitability per share.b. Tends to be higher for value…

A:

Q: in how the Du Pont system of analysis breaks down return on assets. Also explain how it breaks down…

A: Du Pont system is very important concept in calculation the return on equity and it is very…

Q: True or False Returns from the overall market can be thought of as a combination of three factors:…

A: The operating profit of a corporation is the entire earnings from its core business tasks for a…

Q: In the simple Keynesian model of income determination, investment is O the buying and selling of…

A: in the Keynesian determination of national income there is mainly to methods which include saving…

Q: Define the following terms. Basic earnings per share. Potentially dilutive security. Diluted…

A: Basic earning per share is the amount of a company’s earnings allocable to each share of its common…

Q: market capitalization is higher, lower, equal to total shareholders' equity

A: Market capitalization is computed by multiplying the current market price of the shares with the…

Q: Higher the ratio, the more favorable it is, doesn’t stand true for Select one: a. Net profit…

A: Operating ratio is a company's operating expenses as a percentage of revenue. Higher the operating…

Q: The cost of equity is easier to estimate than the cost of either debt or preferred stock.  True…

A: WACC- Weighted average cost of capital (WACC) is the rate that a company is expected to pay on…

Q: A measure of profitability analysis is a. times interest earned. b. cash flow per share.…

A: Evaluation of profitability: In general, financial ratios are used to evaluate capabilities,…

Q: Which of the following is NOT one of the ratios in Internal Liquidity group? Select one: O a. Quick…

A: The liquidity ratios helps to know about the capability of the business to pay off its liabilities…

Q: Through the effects of financial leverage, when EBIT decreases, earnings per share will

A: EBIT(Earnings before interest and taxes) is a measurement of a company's profitability directly…

Q: The most popular method that firms use to calculate the cost of equity is ________.  Group of answer…

A: The question is based on calculation of cost of equity. Cost of Equity for a firm is the expected…

Q: n equity/capital O D.

A: To find the correct option as,

Q: Leverage implies

A: Correct Answer :- A Contains Debt Financing

Q: a. How does the return on total assets differ from the return on stockholders’ equity?b. Which ratio…

A: a. When return on total assets is considered, interest expense is added to the net income and…

Q: Forecasts of cum-dividend earnings can be negative sometimes. True or False

A: Dividend is referred as the distribution of earnings of company to its shareholders as per board of…

Q: Explain how the Du Pont system of analysis breaks down return on assets. Also explain how it breaks…

A: A stakeholder is defined as a "person or group that has an interest in any decision or action of an…

Q: 1. Why is there a cost associated with retained earnings? 2. What is Coleman's estimated cost of…

A: Given: The firm tax rate is 25% The current price of coleman’s is 12% The current price of firm is…

Q: Which of the following is NOT a Financial objective? a. Growth in earnings b. A bigger market share…

A: 1. Financial Objective - Financial Objectives are the objectives set by the organization.

Q: Which of the following statements is not true? a) The return on shareholders’ funds can be…

A:

Q: The appropriate benchmark for the return on equity is: A)the weighted average cost of capital.…

A: Total earning of the firm that is held in the hands of shareholders of the company.

Q: The most important factor to consider when determining the dividends to be declared is a. the…

A: When a company has more cash than it can use(Profit in hand and no further expansion plan to grow),…

Q: Calculate the following profitablity leverage management ratios a. Gross profit margin b. Net…

A: Profitability leverage management ratios   a. Gross profit Margin: [Revenue-cost of goods…

Q: Which of the following statements is correct? A. If assets and spontaneously generated liabilities…

A: Additional funds needed (AFN) / External financing needed (EFN) is the amount of money a company…

Q: The dividend yield ratio decreases when earnings per share increases. True or False True False

A: Earning per share :  This ratio tells how much company is earning for each share. Earning per share…

Q: The market-to-book ratio is the ratio of a firm that reports negative retained earnings on its…

A: The market-to-book ratio is also called as Price-to-Book ratio. This ratio is determined to…

Q: When treasury stock is purchased for cash at more than its par value, what is the effect on total…

A: Answer) The correct answer in the given question is (b): Cost Method: DECREASE Par Value Method:…

Q: Intermediaries can reduce positive income (maturity) gaps by. _the proportions of their liabilities…

A: The assets whose market price is vulnerable to the interest rate changes are called…

Q: The building blocks of financial statement analysis does not include:   a. Market expectations.…

A: Financial statements are those statements which are prepared at the end of the period in order to…

Q: Cost of capital O can be calculated with CAPM O is different of the WACC reflects only equity…

A: Solution 1:- Cost of capital means the minimum rate of return required by the fund providers, which…

Q: a) Define financial leverage. b) What is the effect on earnings? c) When is the use of financial…

A: a) When the company using the debt capital in order to increases the assets and conducting the…

Q: The risk-return trade-off in managing a firm's working capital involves a trade-off between the…

A: Working capital = Current assets - current liabilities