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Lux Company’s total assets fluctuate between P350,000 and P450,000, while its fixed assets remain constant at P250,000. If the firm follows a maturity matching or moderate working capital financing policy, what is the likely level of its long-term financing?
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- C Company is a no-growth firm. Its annual sales fluctuate seasonally from $1,200,000 to $1,997,851, causing its current assets to vary from $146,206 to $200,740, but fixed assets remain constant at $316,765. If the firm follows a moderate (or maturity matching) working capital financing policy, what is the most likely total amount of long-term financing (that is, long-term debt plus equity capital) to support the company's working capital requirements? Round your answer to the nearest dollar, but do not include $ in your answer, e.g., xxx,xxx. Answer:Albrecht Inc. is a no-growth firm whose sales fluctuate seasonally, causing total assets to vary from $320,000 to $410,000, but fixed assets remain constant at $260,000. If the firm follows a maturity matching (or moderate) working capital financing policy, what is the most likely total of long-term debt plus equity capital? (Show your work)The liabilities and owners’ equity for Campbell Industries is found here. What percentage of the firm’s assets does the firm now finance using debt (liabilities)? If Campbell were to purchase a new warehouse for $1.4 million and finance it entirely with long-term debt, what would be the firm’s new debt ratio?
- K-Life financial services Limited uses risk-adjusted return on capital (RAROC) to measure performance on several aspects. In this regard, imagine that an investment officer wants to execute a transaction with the following characteristics: Probability of default (PD) = 30 basis points Loss given default (LGD) = 55% Exposure at default (EAD) = K 1.45 million Expected loss (EL) = K 2,750 This is a loan to a company in the Agro industrial. The firm’s economic capital (EC) model is based on the 99% confidence level, with an average standard deviation of 2.15%. The risk-free rate of return is 6%. Assume that the bank has set a RAROC hurdle rate of 15% and this transaction has a net profit of K10, 500. REQUIRED: Compute the K-life’s risk-adjusted rate of return on this transaction. Now assume that K-life could also have made a loan for the same amount to a firm in the service industry, and that the standard deviation for economic capital purposes in this case is 1.29%. Compute the bank’s…If company’s debt-to-equity ratio is 0.25, what is the weighted average cost of capital for the company if the required rate of return is 12. 1% and the cost of debt is 6.5%? Assume no tax rate A 7.90% B 7.62% C 10.98% D 10.70% E 9.30% Company is considering investing in a project. After consulting with their analysts, they find that the payback period for the project is 2 years and 6 months. If cash inflows are $4, 000. then the initial investment is. Answer rounded to the nearest whole dollarIf a firm now has a debt ratio of 50% but plans to finance with only 40% debt in thefuture, what should it use as wd when it calculates its WACC? Explain.
- A firm has an asset turnover ratio of 5.0. Its plowback ratio is 50%, and it is all-equity-financed. If the profit margin of the firm is 3%, what is the maximum payout ratio that will allow it to grow at 5% without resorting to external financing? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Maximum payout ratio %Please state the term for each of the definitions given. Of all possible financing strategies, this particular approach uses the largest amount of long-term debt, equity, and spontaneous current liabilities, all other things remaining constant. The general term used to collectively describe the firm’s current asset investment, including its cash, marketable securities, accounts receivable, and inventory. This period is equivalent to the average age of the firm’s inventory, as calculated by dividing the firm’s inventory balance by its daily cost of goods sold. Its value is calculated by dividing a firm’s account receivable balance by its average daily credit sales. A current asset financing strategy in which the cash generated by the conversion of the firm’s current assets is used to repay, or liquidate, the firm’s current liabilities used to finance them. The average elapsed time between the purchase of raw materials and labor using an account…What is the size of debt for each firm? Assume that cost of debt = 8%; unlevered cost of capital = 10%; systematic risk of the asset is 1.5
- Use the following information to find the external financing needed (EFN): Current sales: $6,000; Current costs: $3,000; Total Assets: $20,000; Total Debt: $8,000; Total equity: $12,000; Projected sales: $9,600. Total assets and costs are proportional to sales. The firm does not plan to distribute any dividends. The level of debt and equity is independent of the level of sales.(BONUS) ABC Company is a no-growth firm, Its annual sales fluctuate seasonally from $1,200,000 to $1.806.183, causing its current assets to vary from $123,119 to $216,880, but fixed assets remain constant at $316,728. If the firm follows a moderate for maturity matching) working capital financing policy, what is the most likely t total amount of long-term financing (that is, long-term debt plus equity capital) to support the company's working capital requirements? Round your answer to the nearest dollar, but do not include $ in your answer, e.g., xxxxxxxThe activity ratios measure which of the following? Select one: O a the efficiency of the company's supply chain O b. the efficiency with which a company generates sales from its assets Oc the profitability of the company's activities Od the production efficiency of a company's fixed assets If the assumption of financial distress costs is added, then Modigliani and Miller (with taxes) predicts that the optimal capital structure is 100% debt Select one: O True O False