Finance

If a firm needs $300 million in new assets and has projected retained earnings of $72.4 million. What us the external financing needed?

$227.6 assets - retained earnings

Which of the following group is most interested in the liquidity measures to understand a company's ability to pay its bills in the short run?

short- term creditors

If a firm maintains a constant debt-equity ratio and dividend payout ratio and does not use new external equity financing, the firm can grow at a rate no greater than its

sustainable growth rate

What is the EBITDA margin if a firms EBITDA is $175, sales are $540, and net income is $60?

32.41 EBITDA / SALES

In a financial plan using the percentage of sales approach, why is it assumed that some assets increase with sales?

Additional working capital and fixed assets are needed to support growth

Cal's market ROE of 15%. What does this mean?

Cals generated $.15 in profit for every $1 of book value of equity.

Cal's Market has return on equity (ROE) of 15 percent. What does this mean?

Cals generated $.15 in the profit for every $1 of book value ofequity.

A.... PE ratio may indicate that investors believe a company has better prospects for future growth in earnings.

Higher

What does an inventory turnover ratio of 5 mean?`

The entire inventory was sold and replaced 5 times during the year.

Which of the following statements is most likely correct for a firm w/ days sales in receivables of 30 days>

The firm finances approx. 8% of its annual sales at any given time 30/365=8%

What does a total asset turnover ratio of .75 mean

The firm generated $.75 in sales for every $1 in assets.

The quick ratio provides a more reliable measure of liquidity than the current ratio especially when the company's inventory takes ....... to sell.

a long time

The sustainable growth rate can be used to

assess planned growth

The ratio of total assets to sales is known as the

capital intensity ratio

The standardized statements used for the purpose of comparing the financial statements of different companies are called

common- size statements

A firm with a market to book value that is great than 1 is said to have ..... value for shareholders

created

A high growth firm will have a relatively .... need for external financing than a low growth firm.

higher

As long as as all sales requests are being met, a ...... inventory turnover ratio is better.

higher

When analyzing financial performance over time, all else equal, an ..... profit or EBITDA margin is preferred.

higher

Current assets on the common- size sheet over the past 3 years have increased from 32-35% while current liabilities have decreased from 29-25%. This indicates that the firm has increased its

liquidity

T or F: EBITDA is frequently used as a measure of cash flow available to meet financial obligations of a firm.

True

What does it mean if a company's capital intensity ratio is 2.4?

The firm requires $2.40 in asset to generate $1 in sales.