Homework Answers
a) False. Higher payout ratio leads to lower growth, which leads to lower P/E.
b) True.
c) True. Higher debt companies typically have lower P/E ratio.
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E or FALSE: 1. [3 pts) Holt industries is a maker of decorative items. The figures...
7) List the key variables that affect the P/E ratio and explain the relationship between each...
7) List the key variables that affect the P/E ratio and explain the relationship between each variable and the P/E ratio. (a) growth rate in earnings; the higher the growth rate, the higher the P/E ratio (b) general state of the economy, the better the economic outlook, the higher the P/E (e) amount of debt in a company's capital structure; the lower the debt ratio, the higher the P/E (d) current and projected rate of inflation; the lower the inflation,...
1. True or False? The larger the firm's TIE ratio, the less times a firm can...
1. True or False? The larger the firm's TIE ratio, the less times a firm can pay its interest expenses. 2. True or False? Your firm has a debt to equity ratio of 55%, and its biggest competitor has a debt to equity ratio of 66%. Based on this information, your firm is less levered. 3. True or False? A dividend payout ratio larger than 50% indicates a firm retains more than it pays out to shareholders. 4. True or...
questions 9-12 please 9. If a firm increases its plowback ratio, this will probably result in...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1....
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected...
1) An analyst gathered the following financial information about a firm: Estimated (next year’s) EPS  
1) An analyst gathered the following financial information about a firm: Estimated (next year’s) EPS $10 per share Dividend payout ratio 40% Required rate of return 12% Expected long-term growth rate of dividends 5% What is the analysts’ estimate of intrinsic value? Show work. 2) An analyst has made the following estimates for a stock: dividends over the next year $.60 long-term growth rate 13% Intrinsic value $24 per share The current price of the shares is $22. Assuming the...
Problem 1 (100 pts) PIZHAMKA Inc. is a cloth retailer that had the following items on...
Problem 1 (100 pts) PIZHAMKA Inc. is a cloth retailer that had the following items on the Balance Sheet in year 2019: • Retained Earnings - $755 • Inventory - $250 (bought 25 units of pizhamka from Aliexpress) • Cash - $40 • Receivables - $25 • Payables - $60 • Shareholder's Equity - $100 • Debt - $200 (bullet type debt that should be repaid in 2022, with annual interest rate of 10%) PP&E - $800 During Year 2020...
Question 15 (1 point) The following data pertain to Keahi Inc.: Net Revenue $245,000 Net Income $...
Question 15 (1 point) The following data pertain to Keahi Inc.: Net Revenue $245,000 Net Income $22,050 Total Assets $188,462 Total Liabilities $70,673 Stockholders’ Equity $117,789 Calculate the Return on assets (ROA), return on sales (ROS), total asset turnover (TA), and the financial leverage (LEV) for Keahi. Question 15 options: 1) ROA: 62.5%; ROS: 10.0%; TA: 8.5; LEV: : 1.6; 2) ROA: 10.0%; ROS: 10.0%; TA: 2.5; LEV: : 2.5; 3) ROA: 18.7%; ROS: 9.0%; TA: 1.6; LEV: : 1.3;...
Determine the Value of the firm PNC using Discount CashFlow. Table 1. Balance Sheets, PNC and Industry ($ in Thousands...
Determine the Value of the firm PNC using Discount
CashFlow.
Table 1. Balance Sheets, PNC and Industry ($ in Thousands) PNC Benchmark Companies % of Assets 2002 2003 2004 $346 $507 $2,017 $3,622 $6,492 $14,512 $21,004 Cash ST securities Accounts receivable Inventories Current assets Net fixed assets Total assets % of Sales $478 $700 $2,786 $5,002 $8,966 $15,208 $24,174 $625 $625 $3,852 $6,023 $11,125 $18,098 $29,223 2.85% 1.00% 0.01% 5.00% 9.00% 15.01% 20.10% 0.01% 14.24% 25.64% 42.74% 57.26% 100.00% 35.11%...
I need to match these ten industries using Exhibit 3: For example, Electrical Utility is #8 and Retail Grocery is #7. Pl...
I need to match these ten industries using Exhibit 3: For
example, Electrical Utility is #8 and Retail Grocery is #7. Please
help! Thanks. I have 7 confirmed these are:
Each of the 10 publicly traded companies in Exhibit 3 is drawn
from one of the following industries (listed below in random
order):
I have 7 confirmed these are:
1. Management consulting services
2.
3. Data processing and camera
applications services
4. Electronic, aerospace, communication, sensor
systems
5. Hospital and...
7) List the key variables that affect the P/E ratio and explain the relationship between each variable and the P/E ratio. (a) growth rate in earnings; the higher the growth rate, the higher the P/E ratio (b) general state of the economy, the better the economic outlook, the higher the P/E (e) amount of debt in a company's capital structure; the lower the debt ratio, the higher the P/E (d) current and projected rate of inflation; the lower the inflation,...
questions 9-12 please
9. If a firm increases its plowback ratio, this will probably result in ___ P/E ratio A. A higher B. A lower C. An unchanged D. Insufficient information E. None of the above 10. The price-to-sales ratio is probably most useful for firms in which phase of the industry life cycle? A. Start-up phase B. Consolidation C. Maturity D. Relative decline E. None of the above 11. A firm cuts its dividend payout ratio. As a result,...
6) Which of the following statements concerning the constant-growth dividend valuation model is (ar) correct 1. One simple method of estimating the dividend growth rate is to analyze the historical paltem of dividends II. The expected total return equals the return from capital gains plus the return from dividends TIL. The model is applicable to growth firms with initially high growth rates. IV. The intrinsic value calculated using this method can change from one investor to another if their risk-return...
1) An investor should purchase a stock when A) the market price exceeds the intrinsic value B) the expected rate of rectum equals or exceeds the required turn C) the capital gains rate is less than the required rumande dividends are paid D) the market price is greater than the justified price Answer 2) Which of the following variables used in determining a stock's intrinsic als can be known with the greatest level of confidence A] future carmings B) expected...
Problem 1 (100 pts) PIZHAMKA Inc. is a cloth retailer that had the following items on the Balance Sheet in year 2019: • Retained Earnings - $755 • Inventory - $250 (bought 25 units of pizhamka from Aliexpress) • Cash - $40 • Receivables - $25 • Payables - $60 • Shareholder's Equity - $100 • Debt - $200 (bullet type debt that should be repaid in 2022, with annual interest rate of 10%) PP&E - $800 During Year 2020...
Determine the Value of the firm PNC using Discount
CashFlow.
Table 1. Balance Sheets, PNC and Industry ($ in Thousands) PNC Benchmark Companies % of Assets 2002 2003 2004 $346 $507 $2,017 $3,622 $6,492 $14,512 $21,004 Cash ST securities Accounts receivable Inventories Current assets Net fixed assets Total assets % of Sales $478 $700 $2,786 $5,002 $8,966 $15,208 $24,174 $625 $625 $3,852 $6,023 $11,125 $18,098 $29,223 2.85% 1.00% 0.01% 5.00% 9.00% 15.01% 20.10% 0.01% 14.24% 25.64% 42.74% 57.26% 100.00% 35.11%...
I need to match these ten industries using Exhibit 3: For
example, Electrical Utility is #8 and Retail Grocery is #7. Please
help! Thanks. I have 7 confirmed these are:
Each of the 10 publicly traded companies in Exhibit 3 is drawn
from one of the following industries (listed below in random
order):
I have 7 confirmed these are:
1. Management consulting services
2.
3. Data processing and camera
applications services
4. Electronic, aerospace, communication, sensor
systems
5. Hospital and...
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