Bulldogs Inc. currently has earnings before interest and taxes of P3,000,000, a degree of combined leverage of 8, and a degree of financial leverage of 2. What will be Bulldogs Inc.'s expected earnings before interest and taxes in one year if sales decrease by 20% next year?
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Bulldogs Inc. currently has earnings before interest and taxes of P3,000,000, a degree of combined leverage of 8, and a degree of financial leverage of 2. What will be Bulldogs Inc.'s expected earnings before interest and taxes in one year if sales decrease by 20% next year?
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- Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%?a. What are the projected sales in Years 1 and 2?b. What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? c. What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2?d. What is the projected FCF for Year 2?Bl Inc currently has earnings before interest and taxes of P3,000,000, a degree of combined leverage of 8, and a degree of financial leverage of 2. What will be the expected earnings before interest and taxes in one year if sales decrease by 20% next year?An A firm has sales of $10 million, variable costs of $4 million, fixed expenses of $1.5 million, interest costs of $2 million, and a 30 percent average tax rate. Compute its DOL, DFL, and DCL. What will be the expected level of EBIT and net income if next year's sales rise 10 percent? What will be the expected level of EBIT and net income if next year's sales fall 20 percent?
- We are predicting for the end of this fiscal year: Skunk Products' EBIT is $1000, its tax rate is 35%, depreciation is $100, capital expenditures are $200, accounts receivable increase by $100, and accounts payable decrease by $100. What is the free cash flow to the firm? The FCFF will grow at 3%, WACC is 10%. What is the value of the company's assets? FCFF1 = $Grommit Engineering expects to have net income next year of $24.36 million and free cash flow of $22.17 million. Grommit's marginal corporate tax rate is 35%. a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? b. For the same increase in interest expense, how will free cash flow change? a. If Grommit increases leverage so that its interest expense rises by $6.7 million, how will net income change? Net income will fall to $ 4.36 million. (Round to two decimal places.) b. For the same increase in interest expense, how will free cash flow change? (Select the best choice below.) A. Free cash flow increases by the amount of the interest expense. B. Free cash flow decreases by the amount of the interest expense. C. Free cash flow is not affected by interest expense. D. None of the above.Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the table below. Happy Time now only has one outstanding debt with a face value of $110 million to be repaid in the next year. The current market value for the debt is $67 million. The tax rate is zero. If the firm is financed by common equity and debt, what is the expected value of common equity next year? Cash flow in the next year Probability Amount Economy Boom 0.3 $110 million Normal 0.4 $101 million Recession 0.3 $61 million $26.8 million $24.7 million $0 -$18.3 million
- Cordell, Inc., has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?The Leap Corporation expects next year’s net income to be P15 million. The firm’s debt ratio is currently 40%. Leap has P12 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should Leap's dividend payout ratio be next year?Krypton Engineering expects to have net profit next year of $28.18 million and free cash flow of $22.18 million. Krypton's marginal corporate tax rate is 40%. a. If Krypton increases leverage so that its interest expense rises by $8.1 million, how will its net profit change? b. For the same increase in interest expense, how will free cash flow change?
- Happy Time Inc. is expected to generate the following cash flows for the next year, as shown in the table below. Happy Time now only has one outstanding debt with a face value of $110 million to be repaid in the next year. The current market value for the debt is $67 million. The tax rate is zero. If you invest in the corporate debt of Happy Time Inc. today, what is your expected percentage return on this investment? Cash flow in the next year Economy Probability Amount Boom 0.3 Normal 0.4 Recession 0.3 O 36.87% O -26.37% 64.8% O-16.63% $110 million $101 million $61 millionCordell, Inc., has an operating leverage of 3. Sales are expected to increase by 9% next year. What is the expected change in operating income next year?fill in the blank 1 % Increase or Decrease?An enterprise with a profit before interest and tax of 150,000, a compound leverage level of 3 and a financial leverage level of 1.5; What will be the profit before interest and tax if their sales increase by 8% next year?
