A large industry leading firm has dramatically improved thei…
A large industry leading firm has dramatically improved their cash conversion cycle. They are the dominant revenue source for their respective suppliers by a large margin. Their days of inventory on hand has remained stable throughout the period. Which scenario below is most likely?
Read DetailsA firm’s CFO wants to estimate the firm’s WACC, and has comp…
A firm’s CFO wants to estimate the firm’s WACC, and has compiled the following information below. The firm uses CAPM to estimate the cost of equity, and does not account for any kind of floatation costs in the calculation of the cost of capital. What is the firm’s WACC? Capital structure 60% equity Bonds outstanding yield 8.75% Real-risk free rate 5% Market risk premium 6% Beta 1.4 Tax rate 40%
Read DetailsA firm has a steady and stable gross profit margin with slow…
A firm has a steady and stable gross profit margin with slow but positive revenue growth however, their EBITDA margin continues to fall. The company operates in a fiercely competitive industry that is mature. What is the likely cause of this scenario?
Read DetailsYou’ve just done some analysis on a publicly traded company…
You’ve just done some analysis on a publicly traded company and some of your key findings are below. The company; Operates in a highly innovative and high growth industry which is expected to continue for the next 5 years before the industry matures The company is an industry leader with some of the best metrics relative to peers Has an ROE of 15% Operates in a world where GDP is approximately 5% Does not pay a dividend Given these considerations, what is the most appropriate sustainable growth rate (terminal value growth rate) to use for this company?
Read DetailsA company has a high debt to assets ratio and a low interest…
A company has a high debt to assets ratio and a low interest coverage ratio. What ratio below should you be paying close attention to in an effort to evaluate the financial position of the company should they experience some adverse negative exogenous shock?
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