a. Johnson plans to use the preceding ratios as the starting point for discussions with RR’s operating team. Based on the data, does RR seem to be following a relaxed, moderate, or restricted current asset usage policy? b. How can one distinguish between a relaxed but rational working capital policy and a situation in which…
The county has an initiative for students in under-performing schools. To get funding, schools provide each student with eight 2- hour- long group tutoring sessions each month. Also, parents must agree to pay $ 10 per month for each child they register for the program. The county will pay each school $ 200 per enrolled…
a. Calculate (1) the ratio of exchange in market price and (2) the earnings per share (EPS) and price/earnings (PIE) ratio for each company on the basis of the data given in the table that accompanies discussion of the acquisition alternative.b. Find the postmerger earnings per share (EPS) for Rome Industries, assuming that it acquires…
What is Harry Davis’ weighted average cost of capital (WACC)?Why is corporate finance important to all managers? MINI CASE During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to…
The long-run average cost for production of hard-disk drives is given by AC(Q) = √wr(120−20Q + Q2), where Q is the annual output of a firm, w is the wage rate for skilled assembly labor, and r is the price of capital services. The corresponding long-run marginal cost curve is MC(Q) = √wr(120 − 40Q…
Fredstone Consolidated, Inc. and Gradison Enterprises, Inc. are both real estate developers. Each entity owns a 50% general partner interest in Realty Partners, GP, a general partnership. Fredstone and Gradison each contributed $15,000 to form the partnership. The partnership uses the $30,000 contributed by the partners and a recourse loan of $100,000 obtained from an…
Haralambos Fekkos purchased from Lykins Sales & Service a Yammar Model 165D, 16-horsepower diesel tractor and various implements. On Saturday, April 27, Fekkos gave Lykins a check for the agreed-on purchase price, less trade-in of $6,596, and the items were delivered to his residence. The next day, while attempting to use the tractor for the…
David Ricupero suspected his wife Polly of having an affair, so he taped her phone conversations and, based on what he heard, sued for divorce. David’s lawyer, William Wuliger, had the recorded conversations transcribed for use at trial. The parties settled the divorce out of court and signed an agreement that included this clause: Except…
Marlin Company has suspected something “fishy” for several months. It has noticed that its profits have been slowly decreasing, while revenues have been increasing. After consulting with you, a fraud expert, the company has decided to investigate the purchasing patterns of its three purchasing agents—Curly, Larry, and Moe. You decide that a good method for…
Narnia Investments, Ltd., filed a suit in a Texas state court against several defendants, including Harvestons Securities, Inc., a securities dealer. (Securities are documents evidencing the ownership of a corporation, in the form of stock, or debts owed by it, in the form of bonds.) Harvestons is registered with the state of Texas and thus…
