2024 – 1 If the Hunter Corp has an ROE of 13 and a payout ratio of 21

Connect Finance – 2024

1. If the Hunter Corp. has an ROE of 13 and a payout ratio of 21 percent, what is its sustainable growth rate?(Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

 

2. The most recent financial statements for Williamson, Inc., are shown here (assuming no income taxes):

 

Income Statement   Balance Sheet  
  Sales $ 7,200     Assets $ 24,500     Debt $ 10,000  
  Costs   5,270             Equity   14,500  
 

   

   

 
    Net income $ 1,930       Total $ 24,500       Total $ 24,500  
 



   



   



 

 

Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year’s sales are projected to be $8,136.

 

What is the external financing needed? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.)

 

3.The extended version of the percentage of sales method:

se that do not vary with sales.
4. Financial planning, when properly executed:
 
5. The maximum rate at which a firm can grow while maintaining a constant debt-equity ratio is best defined by its:
6. The sustainable growth rate will be equivalent to the internal growth rate when, and only when,:
7. Which account is least apt to vary directly with sales?

 

9. Marcie’s Mercantile wants to maintain its current dividend policy, which is a payout ratio of 35 percent. The firm does not want to increase its equity financing but is willing to maintain its current debt-equity ratio. Given these requirements, the maximum rate at which Marcie’s can grow is equal to:
10. One of the primary weaknesses of many financial planning models is that they:
11. Projected future financial statements are called:
12. The return on equity can be calculated as:
13. When credit is granted to another firm this gives rise to a(n):
14. The most common means of financing a temporary cash deficit is a:
15. Given a fixed level of sales and a constant profit margin, an increase in the accounts payable period can result from:

 

 

18. Selling goods and services on credit is:
19. The credit period begins on the:

 

 

 

23. On average, D & M sells its inventory in 37 days, collects on its receivables in 3.4 days, and takes 35 days to pay for its purchases. What is the length of the firm’s operating cycle?
24. A firm has an inventory turnover rate of 15.7, a receivables turnover rate of 20.2, and a payables turnover rate of 14.6. How long is the cash cycle?

rev: 05_12_2016_QC_CS-51572

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25. Brown’s Market currently has an operating cycle of 76.8 days. It is planning some operational changes that are expected to decrease the accounts receivable period by 2.8 days and decrease the inventory period by 3.1 days. The accounts payable turnover rate is expected to increase from 9 to 11.5 times per year. If all of these changes are adopted, what will be the firm’s new operating cycle?
Jordan and Sons has an inventory period of 48.6 days, an accounts payable period of 36.2 days, and an accounts receivable period of 29.3 days. Management is considering offering a 5 percent discount if its credit customers pay for their purchases within 10 days. This discount is expected to reduce the receivables period by 17 days. If the discount is offered, the operating cycle will decrease from ___ days to ___ days.

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