What is Marley company's enterprise value?
If Marley company has a stock price of $12 per share, 100,000 shares outstanding, $432,000 in liabilities and $100,000 I cash, what is its enterprise value? $1,532,000 (Enterprise value = Total market value of the stock + book value of all liabilities - cash)
What does it mean when a stock goes two for one?
How Stock Splits Work A two-for-one split means that the company will double the number of shares that each of its current shareholders owns by simply dividing the current price of its shares in half. Two new shares will be exactly equal to one old share.
Does a two-for-one split increase the intrinsic value of a stock?
But its intrinsic value didn't change. A two-for-one split means that the company will double the number of shares that each of its current shareholders owns by simply dividing the current price of its shares in half. Two new shares will be exactly equal to one old share.
How many preferred and common stock are distributed each year?
determine the dividends per share for preferred and common stock for each year Year 1 Year 2 Year 3 distributed 10,000 45,000 80,000 preferred 10,000 30,000* 20,000 common 0 15,000 60,000
What does it mean when a company reports ROA of 12 percent?
What does it mean when a company reports ROA of 12 percent? The company gen's $12 in net income for every $100 invested in assets. Current assets on the common-size balance sheet over the pas three yeas have increased from 32 to 35 percent while current liabilities have decreased from 29 to 25%.
What is the formula for computing the internal growth rate IGR )? Multiple choice question?
IGR = (Retained Earnings ÷ Net Income) × (Net Income ÷ Total Assets) IGR = Retention Ratio × ROA.
Which of the following is the correct equation for return on equity?
To calculate ROE, one would divide net income by shareholder equity.
What does a current ratio of 1.2 mean quizlet?
a A current ratio of 1.2 to 1 indicates that a company's current assets are less than its current liabilities.
How do you calculate a company's annual growth rate?
To calculate the annual growth rate formula, follow these steps:Find the ending value of the amount you are averaging. ... Find the beginning value of the amount you are averaging. ... Divide the ending value by the beginning value. ... Subtract the new value by one. ... Use the decimal to find the percentage of annual growth.
How do you calculate a company's internal growth rate?
An internal growth rate for a public company is calculated by first using the return on assets formula (net income divided by average total assets). Then the retention ratio is calculated by dividing retained earnings by net income (or, alternatively, dividing net income less dividends distributed by net income).
How do I calculate return on equity ratio?
To calculate return on equity, divide net profits by the shareholders' average equity. For example, if your net profits are 100,000 and the shareholders' average equity is 62,500, your return on equity, is 1.6 or 160 percent.
How do you calculate return on shareholders equity?
It is calculated by dividing a company's earnings after taxes (EAT) by the total shareholders' equity, and multiplying the result by 100%. The higher the percentage, the more money is being returned to investors.
How is equity calculated?
The calculation of equity is a company's total assets minus its total liabilities, and it's used in several key financial ratios such as ROE. Home equity is the value of a homeowner's property (net of debt) and is another way the term equity is used.
What does a current ratio of 1.4 mean?
Suppose a company's current assets are $2 million, and its current liabilities are $1.4 million. Current ratio is therefore 2 / 1.4 = 1.43. This suggests that for every dollar it owes, the company will be able to raise $1.43. What You Need to Know. In general, the higher the ratio, the greater a company's liquidity.
How is working capital ratio calculated?
The working capital ratio is calculated simply by dividing total current assets by total current liabilities. For that reason, it can also be called the current ratio. It is a measure of liquidity, meaning the business's ability to meet its payment obligations as they fall due.
What is the amount of the current ratio?
How Is the Current Ratio Calculated? Calculating the current ratio is very straightforward: Simply divide the company's current assets by its current liabilities. Current assets are those that can be converted into cash within one year, while current liabilities are obligations expected to be paid within one year.
What is the formula for computing a firm's sustainable growth rate?
You calculate the sustainable growth rate by taking the company's return on equity times the result of 1 minus the dividend payout ratio. Another way to calculate it is to multiply the retention rate by the return on equity.
What is the IGR?
Insect growth regulators (IGRs) are insecticides that mimic hormones in young insects. They disrupt how insects grow and reproduce. IGRs can control many types of insects including fleas, cockroaches, and mosquitos.
What is IGR and SGR?
The IGR assumes that operations will be entirely self-funded by the company's retained earnings. In contrast, the sustainable growth rate (SGR) includes the impact of external financing, but the existing capital structure is kept constant.
How is SGR calculated?
The SGR can be calculated using the sustainable growth rate formula: SGR = retention ratio * ROE . Hence, Company Alpha's SGR is 50% * 20% = 10% . Remember that you can always use our sustainable growth rate calculator to quickly obtain the same result.
Why is stock so expensive?
A stock is cheap or expensive only in relation to its potential for growth (or lack of it). If a company’s share price plummets, its cost of equity rises, also causing its WACC to rise. A dramatic spike in the cost of capital can cause a business to shut its doors, especially capital-dependent businesses such as banks.
What does the price of a stock tell you?
The stock's price only tells you a company's current value or its market value . So, the price represents how much the stock trades at—or the price agreed upon by a buyer and a seller. If there are more buyers than sellers, the stock's price will climb. If there are more sellers than buyers, the price will drop.
How does financial health affect stock price?
Financial Health. A company's stock price is affected by its financial health. Stocks that perform well typically have very solid earnings and strong financial statements. Investors use this financial data along with the company's stock price to see whether a company is financially healthy.
What is the goal of a stock investor?
The goal of the stock investor is to identify stocks that are currently undervalued by the market. Some of these factors are common sense, at least superficially. A company has created a game-changing technology, product, or service. Another company is laying off staff and closing divisions to reduce costs.
How much is Berkshire Hathaway worth in 2020?
1 That triple-digit share price would have made many investors think twice. As of July 24, 2020, Berkshire Class A shares are worth $291,261 each. 2 The stock rose to those heights because the company, and Buffett, created shareholder value.
How does good news affect stock price?
It may be a positive earnings report, an announcement of a new product, or a plan to expand into a new area. Similarly, related economic data, such as a monthly jobs report with a positive spin may also help increase company share prices.
What is intrinsic value?
If there are more sellers than buyers, the price will drop. On the other hand, the intrinsic value is a company's actual worth in dollars. This includes both tangible and intangible factors, including the insights of fundamental analysis . An investor can investigate a company to determine its value.
What is a stock dividend?
Stock dividends decrease the number of shares outstanding. A premium on common stock: Occurs when a corporation sells its stock for more than par or stated value. A company issued 60 shares of $100 par value common stock for $7,000 cash.
What is the capitalization of retained earnings?
The capitalization of retained earnings is equal to: The par value of the shares to be distributed. A company's board of directors votes to declare a cash dividend of $.75 per share of common stock.
What is fair market stock?
fair market. when stock is issued in exchange for assets other than cash, such as land, buildings, and equipment. journal entry if a corporation aquired land with a fair market value that cannot be determined. in exchange, the corporation issued 10,000 shares of its $10 par common stock.
What are the restrictions on retained earnings?
different appropriations (restrictions) for the use of retained earnings to pay dividends. -legal: states may restrict retained earnings by the amount of treasury stock purchased. in this way, legal capital cannot be used for dividends. -contractual: a bank loan may restrict retained earnings so that money for repaying the loan cannot be used ...