Rapid corporate growth in sales and profits can cause financing problems. Elaborate on this statement. (The...
Homework Answers
Rapid growth requires a lot of investment. When a company grows it needs to invest in new projects which will require additional funds. The company needs to plan the funding requirements and also the sources from which these funds will be raised.
A company is faced with choices of raising funds either by equity or by way of debt. This is where the capital structure needs to be assessed and determined so that the shareholder wealth is maximized. The company is also faced with the choice of retaining the profits of the business for future growth or distributing them as dividend to the shareholders. All the sources of finance entail a certain cost and the same has to be taken into consideration while raising funds.
The company can ensure sufficient financing by predicting the cash flows required for future growth as well as estimating the cash flows that would be recovered from the project.
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Rapid corporate growth in sales and profits can cause financing
problems. Elaborate on this statement. (The...
Aa Aa 12. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a fir...
Aa Aa 12. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill their capital requirements through means of short-term financing or long-term financing. Both methods have their advantages and disadvantages. The following statement identifies a possible characteristic of short-term...
at AAB Chapter Review 9-8h Cases Case 9-1 Analysis of financing corporate growth Assume that the...
at AAB Chapter Review 9-8h Cases Case 9-1 Analysis of financing corporate growth Assume that the president of Elkhead Brewery made the following statement in the Annual Report to Shareholders: "The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place...
CASH FLOW BUDGETING PROBLEMS - COMPANY A - Company A is experiencing rapid growth due to...
CASH FLOW BUDGETING PROBLEMS - COMPANY A - Company A is experiencing rapid growth due to the popularity of its recent hardware release. Current sales of $100,000, which increased from $80,000 the previous month, are expected to grow at a 30 percent rate. Cost of sales are a stable 70 percent of sales revenue, yielding a 30 percent gross profit. Company A sales are 15 percent for cash with the remaining 85 percent collected the following month. Inventory-on-hand is maintained...
Statement or Report Description Gives details about the firm's sales, costs, and profits for the past...
Statement or Report Description Gives details about the firm's sales, costs, and profits for the past accounting period. Reconciles (1) the amount of stockholders' equity recorded at the beginning of the reporting period, (2) changes during that period, and (3) the amount of stockholders' equity at the end of the reporting period. Is issued once a year by a corporation and contains basic financial statements and an analysis of past performance and future prospects. Summarizes a company's assets, liabilities, and...
1) Protists can cause significant problems for travelers. Research one such protist and create an informational...
1) Protists can cause significant problems for travelers.
Research one such protist and create an informational poster (to be
displayed in a travel or medical centre) advising people about this
organism. Ensure you include methods of contraction (i.e. water,
food, spa tools), means to prevent infection, (non medical),
treatments (those to be taken before/during travel as well as those
that one would take should they contract the illness), and
prognosis (should one become infected). (20 marks) Marking Rubric
on following...
|OPERATING PROFIT INFLOW DECREASE INVESTING INCREASE FINANCING OUTFLOW CASH NON-CASH A statement of cash flows is...
|OPERATING PROFIT INFLOW DECREASE INVESTING INCREASE FINANCING OUTFLOW CASH NON-CASH A statement of cash flows is a useful report that discloses all movements during the period. Classification of cash flows into operating, and financing activities provides insight into where cash came from and what it was spent on. It is important that cash flows from activities is positive, as it indicates that sufficient cash was received from business operations to cover ongoing business outflows. A significant cash under operating activities...
8. Nonconstant growth stock Aa Aa As companies evolve, certain factors can drive sudden growth. This...
8. Nonconstant growth stock Aa Aa As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.68 per share....
As a student of corporate valuation , assume that you are analysing the financial statement of...
As a student of corporate valuation , assume that you are analysing the financial statement of ABC Ltd. for purposes of estimating the intrinsic value of the company.Presented below are statements of comprehensive income and statement of financial position for the year 2017 (actual) and 2018 (forecasted) ABC LIMITED STATEMENT OF FINANCIAL POSITION 2017(Actual) 2018 (Projected/Forecasted) Sh.(Millions) Sh,(Millions) Cash and Cash Equivalents 10 15 Accounts Receivable 15 10 Inventory 30 40 Propert, Plant and Equipment 300 430 Accumulate...
Can anyone help me with this last few problems? Show Me How Absorption costing Income Statement...
Can anyone help me with this last few problems?
Show Me How Absorption costing Income Statement For the Month Ended August 31 Sales $ 1,200,000 Cost of goods sold 835,000 Gross profit s 365,000 Selling and administrative expenses 233,400 Income from operations Feedback Check My Work b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales $ 1,200,000 Variable cost of goods sold 764,000 Manufacturing...
Which of the following is an incorrect statement? a. LIBOR is a reference rate for a wide range of international transac...
Which of the following is an incorrect statement? a. LIBOR is a reference rate for a wide range of international transactions b. Typically, corporate bonds pay semi-annual coupons over their lives c. Commercial papers are short-term unsecured debt securities d. Investors like to invest in bonds as generally their coupons increase when interest rates increase e. Limited liability means the most that shareholders can lose when a corporation fails is their original investment Which of the following is an incorrect...
Aa Aa 12. Short-term financing Why use short-term financing? Cash flows from operations may not be sufficient for a firm to keep up with growth-related financing needs, or the firm may not be able to always generate enough cash flow to maintain a surplus of cash. Firms prefer to borrow now to fulfill their capital requirements through means of short-term financing or long-term financing. Both methods have their advantages and disadvantages. The following statement identifies a possible characteristic of short-term...
at AAB Chapter Review 9-8h Cases Case 9-1 Analysis of financing corporate growth Assume that the president of Elkhead Brewery made the following statement in the Annual Report to Shareholders: "The founding family and majority shareholders of the company do not believe in using debt to finance future growth. The founding family learned from hard experience during Prohibition and the Great Depression that debt can cause loss of flexibility and eventual loss of corporate control. The company will not place...
Statement or Report Description Gives details about the firm's sales, costs, and profits for the past accounting period. Reconciles (1) the amount of stockholders' equity recorded at the beginning of the reporting period, (2) changes during that period, and (3) the amount of stockholders' equity at the end of the reporting period. Is issued once a year by a corporation and contains basic financial statements and an analysis of past performance and future prospects. Summarizes a company's assets, liabilities, and...
1) Protists can cause significant problems for travelers.
Research one such protist and create an informational poster (to be
displayed in a travel or medical centre) advising people about this
organism. Ensure you include methods of contraction (i.e. water,
food, spa tools), means to prevent infection, (non medical),
treatments (those to be taken before/during travel as well as those
that one would take should they contract the illness), and
prognosis (should one become infected). (20 marks) Marking Rubric
on following...
|OPERATING PROFIT INFLOW DECREASE INVESTING INCREASE FINANCING OUTFLOW CASH NON-CASH A statement of cash flows is a useful report that discloses all movements during the period. Classification of cash flows into operating, and financing activities provides insight into where cash came from and what it was spent on. It is important that cash flows from activities is positive, as it indicates that sufficient cash was received from business operations to cover ongoing business outflows. A significant cash under operating activities...
8. Nonconstant growth stock Aa Aa As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $1.68 per share....
Can anyone help me with this last few problems?
Show Me How Absorption costing Income Statement For the Month Ended August 31 Sales $ 1,200,000 Cost of goods sold 835,000 Gross profit s 365,000 Selling and administrative expenses 233,400 Income from operations Feedback Check My Work b. Prepare an income statement according to the variable costing concept. Shawnee Motors Inc. Variable Costing Income Statement For the Month Ended August 31 Sales $ 1,200,000 Variable cost of goods sold 764,000 Manufacturing...
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