Define the term Return on Common Equity? How does it measure profitability?

Q: What is the dividend payout ratio and the dividend yield ratio?

A: Dividend payout ratio is the ratio between total dividends and the net income of a company. It helps…

Q: What is the profitability index? When is it used?

A: Capital investment analysis: Capital investment analysis is the process by which management plans,…

Q: What two components make up the cost of money for equity?

A: The cost of utilizing debt capital which a borrower pays is called an interest rate. The cost of…

Q: Define Return on equity.

A: Return on equity (ROE): This financial ratio evaluates a company’s efficiency in using stockholders’…

Q: Which are more critical to the dividend decision, earnings or cash flow? Explain.

A: The dividend is the amount paid to the equity shareholders in return to the amount of investment in…

Q: What is the equity multiplier?

A: Answer: Equity multiplier is the ratio of assets to common equity ratio. Companies who have a lot of…

Q: What are the factors favoring a high-dividend policy?

A: Dividend refers to portion of net earnings of the company that is shared with common stock holders…

Q: Define the term profitability index?

A:

Q: What is equity capital?

A: The business cannot operate without funds and the company arranges these funds for the business…

Q: Define the term Return on common equity?

A:

Q: What is ratio on equity?

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

Q: What are the consideration that need for dividend pay out policy?

A: The dividend is referred to as the share of profits, which used to be distributed to the company's…

Q: What is the difference of Cost of Equity and the required rate of return on equities?

A: The amount of money that would be transferred to a company's shareholders if all of the company's…

Q: What is the Cost of Equity Capital?

A: Companies’ capital structure may contain debt and equity. It is not necessary for a company to have…

Q: How can we measure the return on common equity?

A: The return on equity is the percentage earned on the equity investment made by the company. It shows…

Q: what is the difference in accounting between "partial equity" and "full equity"?

A: Full Equity method- When the acquiring company acquires a significant stake in equity of another…

Q: explain the strategies that enhance the return on equit

A: Return on equity is a very important financial ratio. This ratio is essentially a measure of…

Q: What is the equity multiplier, and why is it used?

A: Equity multiplier A financial leverage ratio. It is helpful in the measurement of the proportionate…

Q: (a) Determine the cost of equity

A: Cost of equity in the given problem can be computed using capital asset pricing model.

Q: How do investment opportunities affect dividend policy?

A: The question is based on the concept of investment policy and its impact on dividend policy of a…

Q: Define cost of equity

A: Every company has two major types of financing one is through raising equity shares and the other is…

Q: When is the equity method the appropriate accounting for equity investments?

A:

Q: What are the characteristics of equity investment?

A:

Q: company's cost of equity capital?

A: Given :  Beta of Stock = 1.29 Risk free rate = 5.4% Expected return on market = 12.9%   Formula for…

Q: Explain the fundamental equivalence of valuation based on expected future dividends free cash flows…

A: Introduction: The valuation for dividends, cash flows & earnings generally vary in their own…

Q: Explain how to use the free cash flow valuation model to find the price per share of common equity

A: Free cash flow to the firm is the cash flow available to the company’s suppliers of capital after…

Q: What is the accounting rate of return?

A:

Q: What is the Cost of Equity? What is the Weighted Average Cost of Capital? WACC

A: Interest on debt = 9% Weight of Debt = 60% Weight of Equity = 40% Risk Free Rate in USA = 6% Risk…

Q: What are two ways to determine the cost of equity?

A: Cost of equity can be measured using: CAPM and constant dividend growth model.…

Q: Is this a right formula? Market Value of Equity = Market capitalization - cash and investment +…

A: Market value of equity and market capitalization are both same and is calculated as number of shares…

Q: Which are the different types of equity capital?

A: Equity capital: Equity capital are the funds capitalized by the proprietors in the corporation. The…

Q: Topic: Payout Policy What is the advantage(s) of dividends against retained earnings?

A: Dividend is the share which is given to the shareholders when from the company's profit. Dividend…

Q: find value of equity

A: Shareholders' equity is shown on the balance sheet that represents the changes in the funds…

Q: Define cost of equity? How does it relate to the ‘required rate of return’ (r) on equities?

A: Definition of Cost Equity: Cost of equity is the return that a company requires for an investment or…

Q: what is return on common shareholders' equity?

A: There are various ratios which measure the profitability of a firm like return on equity, return on…

Q: Describe the process of determining the Cost of Equity?

A: The cost of equity is the revenue a firm needs to determine if a venture satisfies the conditions of…

Q: How are financing costs and dividends considered in Scenario Analysis?

A: Net present value (NPV) is computed by subtracting present value of cash outflows from the present…

Q: In what way are profitability and efficiency related? How are profitability and liquidity related

A: The question explains about profitability and efficiency related and profitability and liquidity…

Q: What are equity carve-outs?

A: Introduction: Merger is defined as the mechanism in which the corporate unit, management and…

Q: WHAT IS THE EQUITY INVESTMENT?

A: Equity: Equity refers to that part of the company’s capital which is raised by issuing equity…

Q: In the application of the equity method, how should dividends from the investee be accounted for?…

A: Equity method: Equity method is the accounting method used for accounting equity investments which…

Q: What do the three theories indicate regardingthe actions management should take withrespect to…

A: Dividend policy is the policy the company uses to structure its dividend payout to its shareholders.

Q: what is equity analysis?

A: The person who takes the equity capital of the company is known as a stakeholder of the company. The…

Q: what is equity valuation?

A: The phrase "equity valuation" refers to all tools and procedures used by investors to determine the…

Q: What is the strength of equity method?

A: Investments:   Companies invest in stocks and bonds of other companies or governmental entity to…