Alpha Beta Delta Morso Current Assets 350 612 411 406 Current Liabilities 175 411 613 198 Debt 500 620 702 400 Equity 500 880 890 475 Based on the aforementioned information, your boss at Luger Investments, wants to know which company has the lowest financial risk using debt to equity and debt to capital to analyze the company's capital structure. Without considering business risk which company is least risk based on the above ratios?

Alpha Beta Delta Morso Current Assets 350 612 411 406 Current Liabilities 175 411 613 198 Debt 500 620 702 400 Equity 500 880 890 475 Based on the aforementioned information, your boss at Luger Investments, wants to know which company has the lowest financial risk using debt to equity and debt to capital to analyze the company's capital structure. Without considering business risk which company is least risk based on the above ratios?

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Description: None Alpha Beta Delta Morso Current Assets 350 612 411 406 Current Liabilities 175 411 613 198Debt 500 620 702 400 Equity 500 880 890 475 Based on the aforementioned information,your boss at Luger Investments, wants to know which company has the lowe

Auditing: A Risk Based-Approach (MindTap Course List)

11th Edition

ISBN:9781337619455

Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Publisher:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg

Chapter14: Completing A Quality Audit

Section: Chapter Questions

Problem 24CYBK

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Following items are given for Bank of America Corp.: 1. Loans and leases outstanding 900 m 2. Total assets 1,200 m 3. Equity capital = 100 m 4. Total deposits 1,000 m 5. Nonperforming loans 50 m %3D 6. Stock price 50$ per share 7. Earnings Per Share 4$ Calculate as many of the risk measures as you can from the given data.
What is the blend of long-term financial sources used to finance the firm which may include debt, equity and preferred stock? اخترأحد الخيارات a. Risk and Return b. Capital Budgeting c. Profit Maximization d. None of the option e. Working Capital Creditors look for a. Net working capital for their safety b. High net working capital for their safety c. Less net working capital for their safety d. None of the options e. Balance net working capital for their safety
A company has to decide the proportion in which it should have its own finance and outsider's finance particularly debt finance. Based on the proportion of finance, WACC and Value of a firm are affected. Financial leverage is the extent to which a business firm employs borrowed money or debts. Explain with the help of suitable example how the introduction of debt capital, provides financial leverage, which ultimately impacts the EPS (Earning per Share). В. Two companies X and Y belong to the equivalent risk group. The two companies are identical in every respect except that company Y is levered, while X is unlevered. The outstanding amount of debt of the levered company is Rs. 6,00,000 in 10% debentures. The other information for the two companies is as follows: Particulars Y Net operating income -Interest 1,50,000 1,50,000 60,000 90,000 Earnings to Equity Share Holders 1,50,000 Equity capitalization rate Market value of equity Market value of debt 0.15 0.20 10,00,000 4,50,000 6,00,000…
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…
You are a new analyst at Skybridge Capital. We know from the balance sheet we can asses a company's financial risk. Using debt to capital pick the best answer that applies. А. Debt to capital worsened from 62% to 55% from 2013 to 2015 Debt to capital improved from 62% to 55% from 2013 to 2015 С. Debt to capital worsened from 75% to 61% from 2013 to 2015 D. Debt to capital improved from 75% to 61% from 2013 to 2015 Debt to capital worsened from 55% to 62% from 2013 to 2015 F. Debt to capital improved from 55% to 62% from 2013 to 2015 The company's financial risk has remained the same at about G. 67% over the three year period The company's financial risk has remained the same at about Н. 42% over the three year period B. E.
The DuPont equation shows the relationships among asset management, debt management, and ratios. Management can use the DuPont equation to analyze ways of improving the firm's performance. Its equation is: Ratio analysis is important to understand and interpret financial statements; however, sound financial analysis involves more than just calculating and interpreting numbers. factors also need to be considered. Quantitative Problem: Rosnan Industries' 2022 and 2021 balance sheets and income statements are shown below. Balance Sheets 2022 2021 Assets Cash and equivalents $ 70 $ 55 Accounts receivable 275 300 Inventories 375 350 Total current assets $ 720 $ 705 Net plant and equipment 2,000 1,490 Total assets $ 2,720 $ 2,195 Liabilities and Equity Accounts payable $ 150 $ 85 Accruals 75 50…
14-7 You are a business analyst with a big investment bank, and you are evaluating the equity risk, business risk, and financial risk of Abilon's Inc. You went online and found that the industry consensus on Abilon's equity risk is 1.5. You also know that the company's debt-equity ratio is 1. What is Abilon's estimated business and financial risk based on the model βA(1 + D/E)? Select one: a. 0.5; 1 b. 0.5; 2 c. 0.75 and 0.5 d. 0.75 and 0.75 e. 1 and 1
Accounting Question
Select all that are true with respect to the cost of debt. Group of answer choices it is the return the firm needs to earn overall to satisfy all investors It is the rate the debt holders demand given the risk they face as debt holders Can be estimated using CAPM Cannot be estimated using CAPM because CAPM is used for estimating the cost of equity Is always equal to the YTM on a company's existing bonds Is lower than the YTM on a company's existing debt if there is default risk Can be proxied by the YTM on a company's existing debt if the debt is risk free Flag question: Question 7
discuss the meaning of liquidity and solvency as it applies to a company's liquidity and credit-risk. It is often thought that the higher the company's current ratio and/or the lower the debt-to-asset ratio, the better the company's financial condition. Do you agree with these statements? Select from industry examples noted below to support/explain your point of view Industry Company Current Ratio Debt-Asset Ratio Oil & Gas Industry Average 2020 1.08 .52 Exxon .80 .51 Marathon Oil 1.32 .41 BP America 11.01 .66
Which of the following is the correct explanation for the purpose of financial risk ratios? Select one: O a. They show the relative proportion of debt items with respect to shareholders' equity or total capital. b. They show the profitability of the company over a specific period of time. c. They show the probability of whether the company will face problems in operations. O d. They show the relative levels of liquid assets of the company.
You are the new CFO of Risk SurfingLtd, whichhas current assets of $7,920, net fixed assets of $17,700, current liabilities of $4,580 and long-termdebts of $5,890. Required:a.What are the three important questions of corporate financeyou will need to address? Please briefly explain them and indicate how they are related to the areas in the balance sheet of a company.b.Calculate owners’ equity and build a balance sheet for the company? c.How much is net working capital of the company? d.Calculatethe return on assets of the company giventhat Return on Equity is 30%?e.What is the PE of the company total number of ordinary share outstanding of the companies is 2,000 and market price of each share is $12?