Match the right term to the definition
Homework Answers
The terms are correctly matched:
Capital structure is the particular distribution (percentage wise) of debt and equity that makes up the finances of a company.
Capital budgeting is the planning process used to determine whether an organization's long term investments such as new machinery ( or replacement of machinery), new plants (or new products) and research development projects are worth the funding of cash through the firm's capitalization structure.
The Dividend Policy is a financial decision that refers to the proportion of the firm's earnings to be paid out to the shareholders in form of dividends.
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Match the right term to the definition
5. Fihahclal mahagement decisions and their effect oh tIPm...
5. Financial management decisions and their effect on firm value Financial managers make a variety of...
5. Financial management decisions and their effect on firm value Financial managers make a variety of decisions that can affect a firm's value. These include capital budgeting, capital structure, and dividend policy decisions. A financial manager's decisions and actions are evaluated against the criterion of their effect on the price of the firm's common stock. Good decisions result in increasing share prices and increasing shareholder wealth, while poor decisions achieve the opposite result. Many of the financial decisions that affect...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a firm's assets are financed (using debt, preferred stock and common equity capital) and is often presented as a percentage of the type of financing used As with all financial decisions, the firm should try to set a capital structure that maximizes the stock price, or shareholder value. This is called the optimal capital structure Which of the following statements regarding a firm's optimal capital...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should...
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should be distributed? Capital structure Financing Investment Dividend Working capital QUESTION 6 Suppose a firm is considering acquiring another firm. This financial management activity is part of: Capital structure decision Financing decision Investment decision Dividend decision Working capital decision
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend...
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend of equity and debe used by the fim C. capital gains available on the firms stock D. maturity date for the firm's securities 24. If the line measuring a stock's historic returns against the market's historic returns has a slope greater than 1.0, then the: A. stock is currently underpriced B, market risk peemium is increasing. C. stock has a significant amount of unique...
Select the correct term for each of the following descriptions. These are not necessarily complete definitions,...
Select the correct term for each of the following descriptions. These are not necessarily complete definitions, but there is only one possible answer for each term. Descriptions Terms The level and nature of risk attributable to a firm's activities and operations, and ignoring the risks associated with the firm's capital structure. The situation in which outsiders, such as external shareholders, credits, suppliers, and customers have less and inferior information about a firm's past, current, and future conditions and prospects, compared...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases Impact the firm's value and the investors in different ways. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their financial needs. This circumstance is an illustration of: the residual dividend policy. the signaling hypothesis. dividend irrelevance theory. the clientele effect. Consider the...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
source of capital Target market proportions long term debt 20% preffered stock 10 common stock equity...
source of capital Target market proportions long term debt 20% preffered stock 10 common stock equity 70 A firm has determined its optimal capital structure which is composed of the following sources and target market value proportions. Debt: The firm can sell a 12-year, $1,000 par value, 7 percent semiannual coupon bond for $950. A flotation cost of 2 percent of the face value would be required. Note: Floatation cost only occurs if new security needs to be offered. Preferred...
ALTERNATIVE DIVIDEND POLICIES Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of...
ALTERNATIVE DIVIDEND POLICIES Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of $1.4 out of annual earnings per share of $4.75. Currently, Rubenstein Bros.' stock is selling for $32.00 per share. Adhering to the company's target capital structure, the firm has $10 million in total invested capital, of which 60% is funded by debt. Assume that the firm's book value of equity equals its market value. In past years, the firm has earned a return on...
5. Financial management decisions and their effect on firm value Financial managers make a variety of decisions that can affect a firm's value. These include capital budgeting, capital structure, and dividend policy decisions. A financial manager's decisions and actions are evaluated against the criterion of their effect on the price of the firm's common stock. Good decisions result in increasing share prices and increasing shareholder wealth, while poor decisions achieve the opposite result. Many of the financial decisions that affect...
Why focus on the optimal capital structure? A company's capital structure decisions address the ways a firm's assets are financed (using debt, preferred stock and common equity capital) and is often presented as a percentage of the type of financing used As with all financial decisions, the firm should try to set a capital structure that maximizes the stock price, or shareholder value. This is called the optimal capital structure Which of the following statements regarding a firm's optimal capital...
When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: O Changes in net working capital associated with the project The project's financing costs The project's depreciation expense The project's fixed-asset expenditures Indirect cash flows often affect a firm's capital budgeting decisions. However, some of these indirect cash flows are...
QUESTION 5 Which of the following financial management decisions deals with how the firm's earnings should be distributed? Capital structure Financing Investment Dividend Working capital QUESTION 6 Suppose a firm is considering acquiring another firm. This financial management activity is part of: Capital structure decision Financing decision Investment decision Dividend decision Working capital decision
23. Capital structure decisions refer to the: A. dividend yield of the firm's stock B. blend of equity and debe used by the fim C. capital gains available on the firms stock D. maturity date for the firm's securities 24. If the line measuring a stock's historic returns against the market's historic returns has a slope greater than 1.0, then the: A. stock is currently underpriced B, market risk peemium is increasing. C. stock has a significant amount of unique...
Select the correct term for each of the following descriptions. These are not necessarily complete definitions, but there is only one possible answer for each term. Descriptions Terms The level and nature of risk attributable to a firm's activities and operations, and ignoring the risks associated with the firm's capital structure. The situation in which outsiders, such as external shareholders, credits, suppliers, and customers have less and inferior information about a firm's past, current, and future conditions and prospects, compared...
A firm's value depends on its expected free cash flow and its cost of capital. Distributions made in the form of dividends or stock repurchases Impact the firm's value and the investors in different ways. In some cases, analysts notice that groups of similar investors tend to flock to stocks that have dividend policies consistent with their financial needs. This circumstance is an illustration of: the residual dividend policy. the signaling hypothesis. dividend irrelevance theory. the clientele effect. Consider the...
3. Identifying incremental cash flows Aa Aa E When firms make capital budgeting decisions, they should concern themselves with incremental cash flows, not net income, when evaluating projects. To determine the incremental cash flows associated with a capital project, an analyst should include all of the following except: The project's fixed-asset expenditures Changes in net working capital associated with the project The project's depreciation expense The project's financing costs Indirect cash flows often affect a firm's capital budgeting decisions. However,...
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