Solution-Moderate current asset investment policy

Moderate current asset investment policy

Assignment Help Finance Basics

Reference no: EM131152676

Edwards Enterprises follows a moderate current asset investmentpolicy, but it is now considering a change, perhaps to a restrictedor maybe to a relaxed policy. The firm's annual sales are $400,000;its fixed assets are $100,000; its target capital structure callsfor 50% debt and 50% equity; its EBIT is $39,000; the interest rateon its debt is 10%; and its tax rate is 40%. With a restrictedpolicy, current assets will be 15% of sales, while under a relaxedpolicy they will be 25% of sales. What is the difference in theprojected ROEs between the restricted and relaxed policies?

Reference no: EM131152676

Questions Cloud

Microhedging and macrohedging for a financial institution : Distinguish between Microhedging and Macrohedging for a Financial Institution. How do Forwards differ from Futures?

Problem regarding the net credit position : McGriff Dog Food Company normally takes 20 days to pay for average daily credit purchases of $9,000. Its average daily sales are $10,000, and it collects accounts in 25 days.

How do entrepreneurial opportunities differ from ideas : How do entrepreneurial opportunities differ from ideas? What are the implications of not ensuring that an actual entrepreneurial opportunity exists for one's new venture prior to committing resources into developing that venture

Marketing efforts of for-profit businesses : What are distinctions between the overall marketing efforts of for-profit businesses vs. non-profit organizations?

Moderate current asset investment policy : Edwards Enterprises follows a moderate current asset investmentpolicy, but it is now considering a change, perhaps to a restrictedor maybe to a relaxed policy.

Important to understand cognitive biases in decision-making : Explain why it is important to understand cognitive biases in decision-making. Identify at least three techniques used to mitigate cognitive biases in practice

Complex with an annual gross income : An industrial complex with an annual gross income of $5.5 million and operating income of $2.5 million is up for sale. Your investor group is interested in purchasing it, but need to determine its value.

Difference in the projected roe : With a restricted policy, current assets will be 15% of sales, whileunder a relaxed policy they will be 25% of sales. What is the difference in the projectedROEs between the restricted and relaxed policies?

Determine the vertical displacement of end b of the rod : The curved rod has a diameter d . Determine the vertical displacement of end B of the rod. The rod is made of material having a modulus of elasticity of E . Consider only bending strain energy.

User Account

All Pages

Moderate current asset investment policy

Reference no: EM131152676

Reference no: EM131152676

Questions Cloud

Reviews

Write a Review

Finance Basics Questions & Answers

Financial reporting and analysis

A report on financial accounting

Describe the types of financial ratios

Differences between sole proprietorship and corporation

Prepare a cash budget statement

What are the implied interest rates

State pricing theory and no-arbitrage pricing theory

Small business administration

Effect of financial leverage

Evaluate the basis for the payment to the lender

Importance of opps, ipps, mpfs and dmepos

Time value of money

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT