How to use Return on Equity ratio to determaine whether a company needs to issue stocks or bonds to raise cash. With an example?

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: Which risk ratios best answer each of the following financial questions? a. How quickly is a company…

A: Risk Ratio: This ratio indicates the health of the company. Here health means that the capital…

Q: What effect would the sale of a company's trading securities at their carrying amounts for cash have…

A: Liquidity ratio: It can be defined as the financial ratio that is used to measure the company’s…

Q: The minimum rate of return a firm must earn on its assets to maintain the current value of its…

A: The choice of financing makes the cost of capital a crucial variable for every company, as it will…

Q: Based of stock statement, the bank will calculate and the margin to be maintained by the börfower

A: Stock statement is a statement which provides information regarding value and quantity of stock…

Q: What is the difference between stocks issued and cash dividends declaration?

A: Stock issued: Stock issued means that the company authorized and delivery of shares of stock for…

Q: Is the debt level that maximizes a firm’s expected EPS the same as the debt level that maximizesits…

A: Capital structure refers to the securities or debt included in the total capital of the firm.…

Q: id-in-capital and retained earnings: Similar? Different? What are the main categories of paid-in…

A: It is usually split into two different line items: common stock (par value) and additional paid-in…

Q: How can the Stock price be a good indicator of your company's financial health and may also reflect…

A: In order to examine the financial position of the company investor generally study and analyse the…

Q: A fundamental analyst uses the discounted cashflow method to value firms, and has a short-term…

A: Fundamental Analysis is a technique to value firms on the basis of their fundamentals i.e. their…

Q: Why did the analysts add back stock expenses to get to free cash flows?

A: Stock Compensation: It is a method used by companies to motivate employees by paying them with…

Q: The company cost of capital: measures the return that investors require from the company. is…

A: The company's cost of capital is the return that the investors expect in return for financing the…

Q: Check all the factors that would be associated with an increase in a firm's price-to-earnings ratio.…

A: The financial ratios are the measure of the financial position and performance of a corporation.…

Q: how do the upward trend and downward trend of share price(stock price changes) relates to the market…

A: Market Efficiency - A market is efficient when such  market is characterized by perfect and…

Q: Explain the risk of investing in a company based on

A: Debt to equity ratio indicates that how much Debt is company have and how much company is having…

Q: Discuss the usefulness of the DuPont Analysis in analyzing the drivers of companies’ profitability.…

A: Ratio analysis is a tool used by the financial analyst to measure the financial performance of the…

Q: What portfolio management style focuses on identifying securities that are out of favour with…

A: A portfolio manager who seeks value investment style often purchases stocks that are out of favor…

Q: easier to calculate directly, the expected rate of return on the assets of a firm or the expected…

A: The return on assets states how profitable the assets of company are in generating the revenue. To…

Q: g) What was the trend in dividends (if any) for the firm? h) What was the trend in net borrowing…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Q: Why do stock companies prefer equity financing in raising money for their operations than debt…

A: Equity financing refers to the process whereby a company raises the funds by issuing equity. The…

Q: Both stock and bond returns are based on the cash flows generated by the issuing firm. How do…

A: Shareholders : In simple words, the shareholders of the company refers to the equity stakeholders 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: When using discounted dividend method to estimate stock price, which of the following should be used…

A: When using discounted dividend method to estimate stock price, used required return of equity as…

Q: What are the charateristics of Debt financing and Equity fianancing? If a company wanted to maximize…

A: Answer: Usually for a company there are various sources available to raise funding. Such a issuing…

Q: Discuss how financial leverage or trading on equity is advantageous to the firm.

A: Trading on equity/ financial leverage is the process to earn higher returns on the debt of the…

Q: Where to report Exercise of stock options on cash flow statement?

A: A cash flow statement is a financial statement that summarizes the amount of cash and cash…

Q: For purposes of measuring a firm’s leverage, should preferred stock be classified as debt orequity?…

A: We cannot categorize preferred stock as entirely debt or equity. It is a mixture and is alike bonds…

Q: what is the need to conduct the Solvency Analysis when the liquidity analysis serves the purpose of…

A: “Since you have asked multiple question, we will solve the first question for you. If youwant any…

Q: Briefly discuss the pros and cons of the three (3) approaches used by analysts to value a company’s…

A: Valuing a company’s equity means determining the value of equity for the firm. It is very important…

Q: Why do technical analysts look at the moving average of a company’s stock price, and why do they…

A: Moving Averages Analysis(MAA) is a tool which is helpful in determining the basic trend of the price…

Q: How can ratios help the company decide whether to issue stocks or bonds to raise cash

A: Ratios are an important tool to measure the financial health and wealth of an organization. There…

Q: How to calculate selling price, markups, markdown, stockturn rate, and return on investment.

A: Financial Ratio: A financial ratio, or bookkeeping proportion, is the general size of two chosen…

Q: Which of the following statements is false?(a) The quickest way to determine whether a firm has too…

A: Debt to equity ratio shows whether a corporation is having too much debt or not. Hence, the option…