Questions from Corporate Finance

Q: What are some of the factors that determine the length of the

What are some of the factors that determine the length of the credit period? Why is the length of the buyer’s operating cycle often considered an upper bound on the length of the credit period?

Q: A firm offers terms of 1/10, net 30.

A firm offers terms of 1/10, net 30. What effective annual interest rate does the firm earn when a customer does not take the discount? Without doing any calculations, explain what will happen to this...

Q: Use the sustainable growth rate equations from the previous problem to answer

Use the sustainable growth rate equations from the previous problem to answer the following questions. No Return, Inc., had total assets of $285,000 and equity of $176,000 at the beginning of the year...

Q: Silver Enterprises has acquired All Gold Mining in a merger transaction.

Silver Enterprises has acquired All Gold Mining in a merger transaction. Construct the balance sheet for the new corporation if the merger is treated as a purchase for accounting purposes. The market...

Q: Suppose the Japanese yen exchange rate is ¥85 = $1

Suppose the Japanese yen exchange rate is ¥85 = $1, and the British pound exchange rate is £ 1 = $1.53. a. What is the cross-rate in terms of yen per pound? b. Suppose the cross-rate is ¥131.4 = £ 1....

Q: Under standard accounting rules, it is possible for a company’s liabilities

Under standard accounting rules, it is possible for a company’s liabilities to exceed its assets. When this occurs, the owners’ equity is negative. Can this happen with market values? Why or why not?...

Q: The Starr Co. just paid a dividend of $2.

The Starr Co. just paid a dividend of $2.15 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year, indefinitely. If investors require a return of 11 perce...

Q: Gordon Driving School’s 2011 balance sheet showed net fixed assets of $

Gordon Driving School’s 2011 balance sheet showed net fixed assets of $1.42 million, and the 2012 balance sheet showed net fixed assets of $1.69 million. The company’s 2012 income statement showed a d...

Q: The Optical Scam Company has forecast a 15 percent sales growth rate

The Optical Scam Company has forecast a 15 percent sales growth rate for next year. The current financial statements are shown here: a. Using the equation from the chapter, calculate the external fu...

Q: One tool of financial analysis is common-size financial statements.

One tool of financial analysis is common-size financial statements. Why do you think common-size income statements and balance sheets are used? Note that the accounting statement of cash flows is not...