Determine the degree of financial leverage

Assignment Help Financial Management
Reference no: EM131016247

The DuPont identity can be used to help a financial manager determine the

I. degree of financial leverage used by a firm.

II. operating efficiency of a firm.

III. utilization rate of a firm's assets.

IV. rate of return on a firm's assets.

Reference no: EM131016247

Questions Cloud

Made no additional contributions to the account) : You have an investment account that started with $4000 10 years ago and which now has grown to $12000. What annual rate of return have you earned (you have made no additional contributions to the account)?
What is the capitalized equivalent cost : A manufacturing company is considering a new in investment in a machine that will cost $150,000 and has a maintenance cost of $6000 that occurs every 2 years starting at the end of year 2. Assuming that this equipment will last infinitely under these..
Does it take marios to sell its inventory : Mario's Home Systems has sales of $2,840, costs of goods sold of $2,180, inventory of $508, and accounts receivable of $432. How many days, on average, does it take Mario's to sell its inventory?
What is the sustainable rate of growth : The Green Giant has a 4 percent profit margin and a 30 percent dividend payout ratio. The total asset turnover is 1.2 and the equity multiplier is 1.5. What is the sustainable rate of growth?
Determine the degree of financial leverage : The DuPont identity can be used to help a financial manager determine the degree of financial leverage used by a firm. operating efficiency of a firm. utilization rate of a firm's assets.
Annual standard deviation : A stock is currently priced at $ 63 and has annual standard deviation of 43 percent. The dividend yield of the stock is 2 percent, and the risk-free rate is 4 percent. What is the value of a call option on the stock with a strike price of $ 60 and 45..
Calculate the maximum investment funds : St Hubbins Industrial Technologies (StHIT) predicts that earnings in the coming year will be $45 million. There are 12 million shares outstanding and StHIT maintains a D/E ratio of 2.0. The firm’s value is $300 million. Calculate the maximum investme..
Banks savings and loan offering an introductory rate : You receive a credit card application from Shady Banks Savings and Loan offering an introductory rate of .5 percent per year, compounded monthly for the first six months, increasing thereafter to 16.2 percent compounded monthly. Assume you transfer t..
Make regular savings contributions : Piotr plans to make regular savings contributions of 8,400 dollars per year to his retirement account for 8 years. His first regular contribution to his retirement account is expected in 1 year. In addition, he also plans to make a one-time, special ..

Reviews

Write a Review

Financial Management Questions & Answers

  What is your estimate of the stocks current price

A company currently pays a dividend of $4 per share (D0 = $4). It is estimated that the company's dividend will grow at a rate of 23% per year for the next 2 years, and then at a constant rate of 8% thereafter. The company's stock has a beta of 1.5, ..

  What is the yield to maturity for the investment

Air products and Chemicals sold $125 million of notes in Nov. of 2003 with a December 1. 2010, maturity date. The bonds were sold at a discount of $99.721 per $100 with a coupon rate of 4.125%. Assume that bonds with a face value if $10,000 were purc..

  What is the current value of the bond

Due to a number of lawsuits related to toxic wastes, a major chemical manufacturer has recently experienced a market reevaluation. The firm has a bond issue outstanding with 15 years to maturity and a coupon rate of 8%, with interest paid semiannuall..

  What is the present value of each option

Banks everywhere are offering a rate of 5%. You have just won the $1,000,000 lottery and they are offering you four options to receive your winnings:

  What is the intrinsic value of a share of xyrong stock

The risk-free rate of return is 6.5%, the expected rate of return on the market portfolio is 13%, and the stock of Xyrong Corporation has a beta coefficient of 2.7. Xyrong pays out 50% of its earnings in dividends, and the latest earnings announced w..

  Dual mandate to manage the aggregate price level

The Federal Reserve has a dual mandate to manage the aggregate price level (inflation) and employment in the US economy. Some economists argue that these two objectives may sometimes cause the Fed to focus too much on employment and cause problems wi..

  Going public establishes firms true intrinsic value

Going public" establishes a firm's true intrinsic value and ensures that a liquid

  How much safety inventory does the store carry

Weekly demand for a popular model of HP printers at a Sam’s Club store is normally distributed, with a mean of 30 and standard deviation of 20. The store manager continuously monitors inventory and currently orders 300 printers each time the inventor..

  What will be your rate of return if price of telecom stock

You are bullish on Telecom stock. The current market price is $80 per share, and you have $9,000 of your own to invest. You borrow an additional $9,000 from your broker at an interest rate of 9% per year and invest $18,000 in the stock. a. What will ..

  Pay for one share of this preferred stock

Giant co. has issued preferred stock with a par value of $100 and an annual dividend rate of 8.53 percent. if your required rate of return is 7.18 percent, how much will you be willing to pay for one share of this preferred stock?

  Accounting for bonus-vacation pay and holiday pay

The factory for the week is $200,000, consisting of $140,000 earned by 100 direct laborers and $60,000 earned by 30 indirect laborers. The total of the factory bonuses to be received at year-end is estimated at $400,000. Prepare the entry to distribu..

  What is the new degree of operating leverage

At an output level of 62,000 units, you calculate that the degree of operating leverage is 3.70. Suppose fixed costs are $280,000. What is the operating cash flow at 56,000 units? What is the new degree of operating leverage?

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