1.) Rate of return equity to investors (There should be 3 answers, representing the 3 options)2.) Percent of Leverage on the company (There should be 3 answers, representing the 3 options)3.) Using your answers from items 1-2, what strategic option will you suggest that will have the most earnings for De La Rosa Corporation? EQUITYStockholder's EquityRetained EarningsTotal stockholder's equityTotal liabilities and equityOutstanding shares100,00022,400122,400202,0001000 shares (Par Value - P10 Statement of Financial Position of De La Rosa Corporation (no answer needed on this)Suppose the company is planning to undertake a certain business project that will requirean investment of P120,000 so as to increase its operating income by P50,000. The currentoperating income of the company is 82,000 and Income tax is at 30%.As the Finance Manager, three options have been presented to you:Option 1: Obtain a P120,000 loan with annual interest of 10%.Option 2: Issue an additional of 500 shares capital stock at a market price of P120 pershare and obtain P60,000 bank loan with an annual interest of 5%.Option 3: Issue an additional of 1,000 shares capital stock at market price of P120 pershare.By using these 3 financial alternatives, find the following (next questions):ASSETSCash on hand and in BankReceivablesInventoriesOrganizational ExpenseFurniture & FixturesOffice equipmentTotal assetsLIABILITIESAccounts PayableIncome Tax PayableMortgage Loan PayableTotal liabilities15,00060,00024,00040,00018,00045.000202,00020,0009,60050,00079,600

Ratios are the mathematical expressions between two components used for comparison purposes and…

1.) Rate of return equity to investors (There should be 3 answers, representing the 3 options) 2.) Percent of Leverage on the company (There should be 3 answers, representing the 3 options) 3.) Using your answers from items 1-2, what strategic option will you suggest that will have the most earnings for De La Rosa Corporation?

1.) Rate of return equity to investors (There should be 3 answers, representing the 3 options) 2.) Percent of Leverage on the company (There should be 3 answers, representing the 3 options) 3.) Using your answers from items 1-2, what strategic option will you suggest that will have the most earnings for De La Rosa Corporation?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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