If firm decreases its operating costs

Assignment Help Financial Management
Reference no: EM131300416

If a firm decreases its operating costs, all else constant, then: A. the profit margin increases while the equity multiplier decreases. B. the return on assets increases while the return on equity decreases. C. the total asset turnover rate decreases while the profit margin increases. D. both the profit margin and the equity multiplier increase. E. both the return on assets and the return on equity increase.

Reference no: EM131300416

Questions Cloud

What can business do to improve its climate for diversity : If the expected return on ABC stock is 11%, it has a beta of 0.6 and the risk free rate is 4%. What is the market risk premium? You would like to purchase a 10 year annuity for $850. The rate of return is 6.5%. From this annuity, what is the annual c..
Advantage of the expected future path of the stock : Nagel Equipment has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors expect the average annual future return on the ma..
Preferred stock is riskier to investors than debt : Jana's preferred stock is riskier to investors than debt, yet the preferred stock's yield to investors is lower than the yield to maturity on the debt. Does this suggest that you have made a mistake?
What will be the firms operating cycle : Suppose that Dunn Industries has annual sales of $4.05 million, cost of goods sold of $1,560,000, average inventories of $1,026,000, and average accounts receivable of $660,000. Assume that all of Dunn’s sales are on credit. What will be the firm’s o..
If firm decreases its operating costs : If a firm decreases its operating costs, all else constant, then: the profit margin increases while the equity multiplier decreases. the return on assets increases while the return on equity decreases. the total asset turnover rate decreases while th..
If firm decreases its operating costs : If a firm decreases its operating costs, all else constant, then: the profit margin increases while the equity multiplier decreases. the return on assets increases while the return on equity decreases. the total asset turnover rate decreases while th..
What is the maximum initial cost the company : Scanlin, Inc., is considering a project that will result in initial aftertax cash savings of $1.89 million at the end of the first year, and these savings will grow at a rate of 2 percent per year indefinitely. What is the maximum initial cost the co..
Demander of health policies : The ability to engender admiration, loyalty, and emulation from others so such an extent that an individual gains power to exert influence is known as. Which of the following IS NOT a demander of health policies?
What is the true initial cost figure the company : Caughlin Company needs to raise $45 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. What is the true initial cost figure the company should use whe..

Reviews

Write a Review

Financial Management Questions & Answers

  What is the rate of annual interest on each loan

Your firm is considering the following three alternative bank loans for $1,000,000: Assume that you would normally not carry any bank balance that would meet the 20 percent compensating balance requirement. What is the rate of annual interest on each..

  What is the current value of one share of stock

The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on increasing its annual dividend by 18 percent a year for the next 4 years and then decreasing the growth rate to 3 percent per year. The company just paid its..

  Describe a method for testing interest rate parity exists

Describe a method for testing whether interest rate parity exists. Why are transaction costs, currency restrictions, and differential tax laws importan

  Increase the operating cycle

Identify which of the following will increase the operating cycle.

  Valuate berkshire hathaway with two different methods

Valuate berkshire hathaway (BRK) with two different methods. Use discounted cash flows in conjunction with an appropriate ratio. How does the share price compare to the calculated valuations?

  Define internal growth rate and sustainable growth rate

Felicia & Fred’s executive team has noted the customer feedback regarding the holiday purse offering and has decided to expand its product line into handbags as well. Define the internal growth rate and the sustainable growth rate. What consideration..

  What is the future worth of this investment

Carlisle Company has been cited and must invest in equipment to reduce stack emissions or face EPA fines of $18,500 per year. An emission reduction filter will cost $75,000 and have an expected life of 5 years. Carlisle's MARR is 10 percent/year. wha..

  Current after-tax market value of the proposed factory site

Huskers Inc. is considering to build a bowling ball manufacturing facility. Find the NPV and IRR of the project using the information given below: Cost of test marketing already spent: $300,000. Current after-tax market value of the proposed factory ..

  Explain four variables of the optimal financial structure

Debt can be a double-edged sword, depending upon the interest rates and the return on the investment. Debt is generally part of a company's financial structure. The upcoming discussion topic is about the financial structures of MNEs.

  Business has been growing well over the past few years

Nu-platinum is a highly successful mining company. The company just paid a dividend on the stock of $0.60. Business has been growing well over the past few years and is expected to do so at 25% for the next 3 years.  If the required return is 20% wha..

  Interest expenses-what is the operating cash flow

Your firm has net income of $338 on total sales of $1,420. Costs are $780 and depreciation is $120. The tax rate is 35 percent. The firm does not have interest expenses. What is the operating cash flow?

  Computing the firms weighted average cost of capital

Florida Groves has a $250,000 bond issue outstanding that is selling at 102 percent of face value. The firm also has 2,000 shares of preferred stock valued at $38 a share and 45,000 shares of common stock valued at $24 a share. What weight should be ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd