User Account

All Pages

Why would firms with high roas not keep leveraging up

Assignment Help Finance Basics
Reference no: EM13901574

DISADVANTAGES OF FINANCIAL LEVERAGE. The intuition behind the benefits of financial leverage is that a firm can borrow funds that bear a certain interest rate but invest those funds in assets that generate returns in excess of that rate. Why would firms with high ROAs not keep leveraging up their firm by borrowing and investing the funds in profitable assets?

Reference no: EM13901574

Questions Cloud

Agree to have their business disputed mediated : Stephanie and Melissa agree to have their business disputed mediated. The mediator carefully listens to both parties and then makes a recommendation favoring Melissa. Stephanie refuses to accede to the mediator's recommendation. What can Melissa do?
Compute rate of roa and disaggregate roa into profit margin : Compute the rate of ROA for 2008 and disaggregate ROA into profit margin for ROA and asset turnover components.
Industrialized and developing countries : Do you agree or disagree with the following statement? Both industrialized and developing countries must become carbon-neutral by 2025. What moral considerations underlie your stance?
Best argument to challenge this requirement is that violates : Adam invests in a franchise with Best Gas Stations, Inc. Best requires Adam to exclusively buy Best products for every phase of the operation. Adam's best argument to challenge this requirement is that it violates
Why would firms with high roas not keep leveraging up : Why would firms with high ROAs not keep leveraging up their firm by borrowing and investing the funds in profitable assets?
Unifom global control standards : Propose a plan for unifom global control standards and how to enforce them, take a position on whether wealthy nations have an obligation to provide poorer nations with, or help them develop, greener industries and sources of energy.
About the casino gambling : The legislature of the state of Florida approves casino gambling in Florida, but just in three locations in southeast Florida, and with the significant limitation that the casinos will not be allowed to advertise in any Florida media. The state of Fl..
Explain likely reasoning the company president had in mind : ADVANTAGES OF FINANCIAL LEVERAGE. A company president remarked. Explain the likely reasoning the company president had in mind to support this statement.
Explain how organizational behavior can aid you in decision : Explain how Organizational Behavior can aid you in decision-making and problem-solving.

Reviews

Write a Review

Finance Basics Questions & Answers

  The firm has 294 million shares of common stock

you are considering buying common stock in grow on inc. you have calculated that the firms free cash flow was 7.60

  Determine the stocks required rate of return round the

nicks enchiladas incorporated has preferred stock outstanding that pays a dividend of 5 at the end of each year. the

  Find what is the expected capital gains yield

For the coming year, what is the expected capital gains yield? Round your answer to two decimal places.

  Calculating coefficient of variation

Myers Business Systems is estimatingthe introduction of a new product. The possible levels of unit sales and the probabilities of their occurrence are below:

  Crypton electronics has a capital structure consisting of

crypton electronics has a capital structure consisting of 45 common stock and 55 debt. a debt issue of 1000 par value

  Prepare the assets section of heather corporations balance

heather corporation has collected the following information related to its december 31 2012 balance sheet.accounts

  Estimate an industry-based equity beta for kroger

Estimate the industry asset beta, weighting each company by its proportion of the sample total market value of equity. Relever the industry asset beta to reflect Kroger's capital structure to estimate an industry-based equity beta for Kroger.

  Ethical limits that managers should observe when taking risk

Risk is a major concern of almost all investors. When shareholders invest their money in a firm, they expect managers to take risks with those funds. What do you think are the ethical limits that managers should observe when taking risks with other p..

  Financial ratios are important to the understanding of the

financial ratios are important to the understanding of the financial health of a company. you and your colleagues work

  Why investors invest trillions with active managers

Research has shown that active portfolio managers don''t consistently outperform the market. Given this research, why do you suppose investors continue to invest trillions of dollars with active managers?

  How the composition of the principal and interest components

Explain how the composition of the principal and interest components of a fixed-rate mortgage change over the life of the mortgage. What are the implications of this change?

  What is the company cost of equity

1. A company has a capital structure of 40% debt and 60% equity. The YTM on the company's bonds is 9%, and the company's effective tax rate is 40%. The CFO has estimated the company's WACC to be 9.96%. What is the company's cost of equity? Sho..

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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