Chapter 11: Reporting and Interpreting Stockholders’ Equity * Corporate Ownership * Shares of stock can be purchased in small amounts. * Ownership interests are transferable. * Stockholders are not liable for the corporation’s debts * Common stock – the basic voting stock issued by a corporation to stockholders. * Voting rights * Dividends * Residual claim – if the company ceases operations, stockholders share in any assets remaining after
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coverage ration should lie in the range of 5x to 3.6x to have optimal coverage. Diageo future strategy is based on organic and inorganic expansion. Under inorganic growth scenario, Diageo needs $6 to $8 billion to acquire other players in the market. To finance these acquisitions, Diageo would raise additional debt from the market. To make this strategy effective, Diageo has to keep very low cost of borrowing, which can only be achieved by keeping high interest coverage ratio and credit rating in the investment
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INTRODUCTION This memo addresses the feasibility of the NESA project and provides a brief overview of: our financial condition, the iron ore market, major risks associated with this project, estimated project NPV, and the benefits of the financing packages. From our analysis, the NPV of this project is $137.36M - $104.31M. While there is risk associated with venturing into an unfamiliar market in a politically volatile country, the debt financing packages mitigate this risk. Thus, we believe that
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CASE: Pioneer Petroleum I. Does Pioneer estimate its overall weighted average cost of capital correctly One could argue that their assumption of debt policy staying same (12%) isn't very good since all estimates predict on growing investments worth billions during the next year. In addition, a closer analysis of the sources of the infromation shows that the return on equity (10%) is just an assumption made based on current earnings yield. Their first alternative would have been using divident
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FIN 515 Week 1 Homework Mini case PG. 46 01-11-14 A- Corporate finance is important because it enables managers to have an understanding of what funds would be necessary for upcoming projects and projects of their company as well as allowing them to plan ahead. B- When a company is evolving from a start up to a major corporation, it will probably have to grow through the stages of sole proprietorship, partnership, and then a corporation. A sole proprietorship has advantages such as being
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Project Finance Definition: It is a method of raising long-term debt financing for major projects based on lending against the cash flow generated by the project alone. It is a financial discipline that has developed rapidly over the last 20 years. Project Finance is not the same thing as “financing projects.” Traditionally: In developed countries: • Large-scale public sector projects in developing countries were financed by public-sector debt • Private-sector projects
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Unit 2 Business resources P4 What is financial resources? Companies often need finance for starting or continuing business operations. Small businesses typically need start-up finance, while medium and larger companies may need finance to expand operations. Different types of financial resources are usually available based on the company’s size and needs. Each financial resource offers different advantages or disadvantages to companies. Financial resources are the money that are available to a business for spending in
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Financing and investment are two major decision areas in a firm. In the financing decision the manager is concerned with determining the best financing mix or capital structure for his firm. Capital structure could have two effects. First, firms of the same risk class could possibly have higher cost of capital with higher leverage. Second, capital structure may affect the valuation of the firm, with more leveraged firms, being riskier, being valued lower than less leveraged firms. If we consider
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University of phoenix | Interpreting Financial Results | MGMT-571 FINANCE | | Mario Medina | 3/11/2014 | | Financial ratios play a key role in determining how a company is doing financially either for the good or the bad. Financial Ratios can be used internally or externally to determine how financially stable a company is. For this assignment we will use three common ratios to determine how financially stable and how Under Armour is over the last three years. Current Ratio “To
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PRACTICE FINAL EXAM (Answers provided at practice test’s end) The following questions are worth 3 points each. Provide the single best response. 1. The primary goal of a publicly-owned firm interested in serving its stockholders should be to |a. |Maximize expected total corporate profit. | |b. |Maximize expected EPS.
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