If a firm has leverage then this implies that?
We see that if a firm has leverage then this implies that firm has presence of debt in the capital structure
Yellowstone believes in the tradeoff theory of capital structure. This implies a) that the firm is trading off its debt and its equity perfectly. b) that the firm has an optimal capital structure c) that the present value of the financial distress costs offset the present value of homemade leverage costs. d) that the firm does not have an optimal capital structure e) that the NPV of the firm is zero.
If a firm has the lowest possible degree of operating leverage and the lowest possible degree of financial leverage, then DOL equals 1, and DFL equals 0. DOL equals 0, and DFL equals 1. DOL equals 1, and DFL equals 1. None of the options
Integrative—Leverage and risk Firm R has sales of 101,000 units at $1.97 per unit, variable operating costs of $1.68 per unit, and fixed operating costs of $6,010. Interest is $10,080 per year. Firm W has sales of 101,000 units at $2.59 per unit, variable operating costs of $0.98 per unit, and fixed operating costs of $62,600. Interest is $17,400 per year. Assume that both firms are in the 40% tax bracket. a. Compute the degree of operating, financial, and total...
A firm has a tax burden ratio of 0.7, a leverage ratio of 1.4, an interest burden of 0.4, and a return on sales of 13%. The firm generates $2.50 in sales per dollar of assets. What is the firm's ROE? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Integrative-Leverage and risk Firm has sales of 104.000 units at $2.05 per unit, variable operating costs of $1.71 per unit, and fixed operating costs of $6,000 Interest is $10.080 per year Firm Whas sales of 104 000 units at $2.56 per unit, variable operating costs of $0.98 per unit, and fixed operating costs of $62,800 Interest is $17.900 per year. Assume that both firms are in the 40% tax bracket a. Compute the degree of operating, financial, and total leverage...
Suppose that you estimated the Degree of Operating Leverage of a firm as 1.9 and the Degree of Financial Leverage as 1.9, the Degree of Total Leverage of the firm would be ____.__. Round your answer to 2 decimal places.
Question 1 Does financial leverage affect the profitability of a firm? Discuss your argument in the context of profitability ratios and a firm’s earning power. A firm has an EBIT of $35,000. It is currently an all equity firm has 9,000 shares of stock outstanding at a market price of $45 a share. The firm has decided to leverage its operations by issuing $120,000 of debt at an interest rate of 9.5 percent. This new debt will be used to...
Integrative-Leverage and risk Firm R has sales of 97,000 units at $2.03 per unit, variable operating costs of $1.67 per unit, and fixed operating costs of $6,070. nterest is $10,080 per year. Firm W has sales of 97,000 units at $2.56 per unit, variable operating costs of $0.97 per unit, and fixed operating costs of $62,400 Interest is $17,200 per year. Assume that both firms are in the 40% tax bracket. a. Compute the degree of operating, financial, and total...
Positive working capital for a firm implies that current assets are partially financed by long-term financing fixed assets are partially financed by current liabilities current assets are completely financed by current liabilities firm has no short-term debt
Problem 19-14 A firm has a tax burden ratio of 0.6, a leverage ratio of 155, an interest burden of 0.7 and a return on sales of 15%. The firm generates $210 in sales per dollar of assets What is the firm's ROE? (Do not round intermediate calculations. Round your answer to 2 decimal places.) ROE %