What is the relationship of WACC to the market value of a company?

Q: 3. How does operating leverage impact the operating risk and profit levels of a company?

A: Operating leverage measures the percentage increase in operating income which is a result of change…

Q: what is financial leverage and its implications for company performance?

A: Company borrow amounts to buy assets and do business.

Q: The financial leverage implications for company analysis?

A: 1. Financial Leverage: To finance the New Assets management borrowed money. it is called financial…

Q: How does current ratio and quick ratio relate to a firm's financial profitability?

A: Current ratio and quick ratio are indirectly related to a firm's financial profitability.

Q: What is the importance of a pro forma income statement to a firm?

A: Pro forma is referred as the sake of form. It is used to represent the information in a formal…

Q: What is the company's cost of levered equity?!

A: Cost of equity is the rate at which company has acquired funds in exchange for the equity shares. It…

Q: Can a company be profitable but not liquid? Explain.

A: Liquidity: It can be defined as the ease or quickness with which the short term assets of a company…

Q: What is a firm’s business risk? operating leverage? How does the operating leverage affect the…

A: A business can be defined as the entity or organization established to earn profit by providing…

Q: What does this say about the company's profitability?

A: We are provided with three profitability ratios here - net profit margin ratio, ROA and ROE - and we…

Q: What are the five basic competitive forces that determine the intensity of competition in an…

A: Porter's five forces of model that describes the intensity of competition. 1. Supplier bargaining…

Q: What do we mean by the optimal capital structure for a company

A: The answer is stated below:               Note: Answering the first question as there are multiple…

Q: how to assess a company's success in using leverage to increase returns?

A: Leverage refers to the risk involved and the borrowed capital that is used to undertake a project…

Q: How does operating leverage affect business risk?

A: If an organization has high fixed expenses or cost, and if an organization experiences issues…

Q: How do i calculate market valuation in a company?

A: The term market valuation of a company refers to the ascertainment of the value of the company as…

Q: Why might an analyst be interested in examining the earnings persistence of a company?

A: Earnings persistence can be defined as the continuity and longevity of the potential earnings, which…

Q: When calculating a company’s WACC, should book value, market value, or targetweights be used?…

A: A company often raises money from various sources such that it has to provide a return in the form…

Q: What is the net income for this firm?

A: Net Income is revenue excluding all expenses of the firm

Q: What are the advantages of bringing IPO  into company?

A: To run the business, the firm needs funds for a long time. To arrange the funds, firms issue various…

Q: The business risk of a company is most accurately measured by the company's: a. Debt-to-equity…

A: Bussiness risk consists uncertainty of sales and profits and other production related uncertainty.

Q: What does capital structure of a company means?

A: Capital structure of a company is the proportion of various long term sources of finance used to…

Q: book value.”

A: Market value is the value that is determined by the forces that are external to the company such as…

Q: What is meant by catering theory, and how might it impact a firm’s dividend policy?

A: Dividend policy refers to the policy which a company may have with respect to the payment of…

Q: Explain in detail why company valuation is influenced by capital structure decisions.

A: Capital structure of a company shows how has the company raised its capital. A company's capital…

Q: How does the value of a levered firm compare to the value of anunlevered firm that is otherwise…

A: When the company having debt in its capital structure it is referred to as a levered firm. When the…

Q: What is Weighted Average Cost of Capital or WACC? How can current economic and political…

A: Weighted average cost of capital is the cost of capital to the firm inclusive of the cost of capital…

Q: How can you tell of a company is profitable?

A: Profit. of a Company:After deducting all of the costs associated with running a business, the amount…

Q: Which of the following is most accurate about fundamental and technical analysis? Fundamental…

A: Hi There, Thanks for posting the questions. As per our Q&A guidelines, must be answered only one…

Q: Why is the WACC (weighted average cost of capital) important? When is it useful to a company?

A: Weighted average cost of capital is important to determine the minimum required return of all the…

Q: What does the term hedging mean? Why do companies elect to follow this strategy?

A:

Q: How do the managers estimate the opportunity cost of capital for a company?

A: The cost of capital is the opportunity cost (or best alternative rate of return) for the assets…

Q: How can the fundamental price of a firm contribute to the wealth maximization of a firm?

A: The fundamental price of a firm depends on its intrinsic value which is dependent on the present and…

Q: w does current ratio and quick ratio relate to a firm's financial profitability? What should the %s…

A: Current ratio and quick ratio are important from view point of liquidity and liquidity is very…

Q: What are the advantages/disadvantages of using the market multiples method to estimate the value of…

A: It is a valuation strategy that decides the distinctive market values for similar organizations.…

Q: What is the calculation for 'Profit Margin' for the firm in that picture?

A: Information Provided: 2015 net profit = 39,878 2015 Revenue = 100,000   2016 net profit = 11,527…

Q: Is a company's dividend policy important?

A: Dividend policy is about the dividend that has to be paid by the company. It is about how much…

Q: often defined as maximizing the va

A: Solution Concept The main objective of business               The business is carried out with a…

Q: What is the relationship of business risk, financial risk, and stand-alone risk? How to calculate…

A: Risk refers to the proportion of uncertainty arising as a potential financial loss inherent while…