But the debt carries covenants

Assignment Help Finance Basics
Reference no: EM131710457

Your firm successfully issued new debt last year, but the debt carries covenants. Specifically, you can only pay dividends out of earnings made after the debt issue and you must maintain a minimum quick (acid-test) ratio of 1:1. Your net income this year was $70 million. Your cash is $10 million, your receivables are $8 million, and your inventory is $5 million. You have current liabilities of $19 million. What is the maximum dividend you could pay this year and still comply with your covenants?

Quick Ratio is ((current assets-inventory)/current liabilities))

Reference no: EM131710457

Questions Cloud

Evaluating a security : Calculate the following investment's expected return and its standard deviation. Should Potts invest in this security?
What is the future value of annual payments : What is the future value of annual payments of $12,000 a year for 25 years at 12 percent interest compounded annually?
What is the standard error of the estimator : Last year, consumers increasingly bought fleece (industry jargon for hotselling jogging suits, which now rival jeans as the uniform for casual attire).
Discuss hydroelectric dams and geothermal : but they all have their own limitations and possible downsides, including hydroelectric dams, geothermal
But the debt carries covenants : Your firm successfully issued new debt last year, but the debt carries covenants. Specifically, you can only pay dividends out of earnings
Construct the stratum weights for proportional allocation : A financial analyst is interested in estimating the average amount of a foreign loan by U.S. banks. The analyst believes that the amount of a loan may.
Define principal energy source for electricity generation : Many people believe that the United States should continue to use coal or natural gas as the principal energy source for electricity generation
How the recommended changes relate to the companys mission : Summarize how the recommended changes relate to the company's mission. Consider including the long-term impact of this company's policies.
Conducting a simple random sample of fitness clubs : Since travel and administrative costs for conducting a simple random sample of all members of fitness clubs throughout Japan would be prohibitive.

Reviews

Write a Review

Finance Basics Questions & Answers

  Performance of the organization

Suggest one (1) key insight that may be gained by the administrator in regard to the performance of the organization.

  If firms use the company cost of capital for evaluating all

if firms use the company cost of capital for evaluating all of their projects which of the following is likely? i

  Define and discuss the concepts of risk and return also

define and discuss the concepts of risk and return. also discuss the importance of portfolio diversification and the

  Information regarding the project

In your response please provide financial information regarding the project (what is available): initial outlay, projected cash flows, final dollar losses.

  Understanding of the ties in the master budget

1. How are the master budget and the production budget related? How does the understanding of the ties in the master budget and the production budget help individuals manage more effectively? 2. Why must historical data be used carefully when prep..

  Why does cds bond rating and cost of debt depend on the

why does cds bond rating and cost of debt depend on the amount of money

  What is the bonds yield to maturity

Assume there is a 12- year, 9.5% semiannual coupon bond, with a par value of $1000. The bond sellsy for $1,152. A. What is the bond's yield to maturity. B. What is the bond's current yield?

  Evaluate what the cost of the house would be if smiths use

mrs. smith and her husband george are planning their retirement and their dream house on the lake.nbsp the lot for the

  Compare the acid test ratios between 2011 and 2012

Compare the acid test ratios between 2011 and 2012. comment on your findings.

  Computing wal-mart-s original strategy for creating value

Wal-Mart, discount merchandiser, started by putting large stores in small Sunbelt towns that its competitors had neglected. Compute Wal-Mart's original strategy for creating value?

  What is the net interest income in dollars

What is the net interest income in dollars if the spot prices at the end of the year are $1.50/£ and €1.65/$? What is the net interest income in dollars if the spot prices at the end of the year are $1.35/£ and €1.35/$ and the liabilities instead co..

  If the opportunity cost of capital is 14 percent what is

a factory costs 800000. you reckon that it will produce an inflow after operating costs of 170000 a year for 10 years.

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