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4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or by
relying on high borrowings with relatively low equity capital (high gearing).
Required:
Explain why a highly geared company is generally more risky from an investor’s point of view than a company
with low gearing. (3 marks)
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更多 “ 4 (a) A company may choose to finance its activities mainly by equity capital, with low borrowings (low gearing) or byrelying on high borrowings with relatively low equity capital (high gearing).Required:Explain why a highly geared company is generally more risky from an investor’s point of view than a companywith low gearing. (3 marks) ” 相关考题
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ENUM类型的字段level定义为(LOW、MIDDLE、HIGH),ORDERBYlevelasc的顺序是()
A、HIGH、LOW、MIDDLEB、LOW、MIDDLE、HIGHC、MIDDLE、LOW、HIGHD、HIGH、MIDDLE、LOW
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18 Which of the following statements about accounting ratios and their interpretation are correct?1 A low-geared company is more able to survive a downturn in profit than a highly-geared company.2 If a company has a high price earnings ratio, this will often indicate that the market expects its profits to rise.3 All companies should try to achieve a current ratio (current assets/current liabilities) of 2:1.A 2 and 3 onlyB 1 and 3 onlyC 1 and 2 onlyD All three statements are correct
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(b) Assuming that the cost of equity and cost of debt do not alter, estimate the effect of the share repurchase on the company’s cost of capital and value. (5 marks)
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11 Which of the following statements are correct?1 A company might make a rights issue if it wished to raise more equity capital.2 A rights issue might increase the share premium account whereas a bonus issue is likely to reduce it.3 A bonus issue will reduce the gearing (leverage) ratio of a company.4 A rights issue will always increase the number of shareholders in a company whereas a bonus issue will not.A 1 and 2B 1 and 3C 2 and 3D 2 and 4
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4 (a) Explain the meaning of the term ‘working capital cycle’ for a trading company. (4 marks)
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(ii) Explain why the disclosure of voluntary information in annual reports can enhance the company’saccountability to equity investors. (4 marks)
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3 Damian is the finance director of Linden Limited, a medium sized, unquoted, UK trading company, with a 31 Julyyear end. Damian personally owns 10% of the ordinary issued share capital of Linden Limited, for which he paid￡10,000 in June 1998. He estimates that the current market value of Linden Limited is ￡9 million and that thecompany will make taxable profits of ￡1·4 million in the forthcoming year to 31 July 2007.(a) Damian believes that Linden Limited should conduct its activities in a socially responsible manner and to thisend has proposed that in future all cars purchased by the company should be low emission vehicles. The salesdirector has stated that several of his staff, who are the main recipients of company cars, other than the directors,are extremely unhappy with this proposal, perceiving it as downgrading their value and status.The cars currently provided to the sales staff have a list price of ￡19,600, on which Linden Limited receives abulk purchase discount of 6% from the dealer, and a CO2 emission rate of 168 grams/kilometre. The companypays for up to ￡400 of accessories, of the salesmen’s own choice to be fitted to the cars and all of the runningcosts, including private petrol. The cars are replaced every three years and the ‘old’ cars are sold at auction,because they are high mileage vehicles.The low emission cars it is proposed to purchase will have the same list price as the current cars, but the dealeris only prepared to offer a bulk discount of 5% on these vehicles. Damian does not propose to make any otherchanges to Linden Limited’s company car policy or practice.Required:(i) Explain the tax consequences of the proposed move to low emission vehicles for both the individualsalesmen and Linden Limited, illustrating your answer by means of relevant calculations of the tax andnational insurance (NIC) savings arising. (9 marks)
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(ii) State the taxation implications of both equity and loan finance from the point of view of a company.(3 marks)
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Term borrowings are used to finance the borrowers to purchase buildings and equipment needed, working capital and existing obligations.A．RightB．WrongC．Doesn't say
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The desirable properties of a marine fuel oil should include .A.high flash point and high viscosityB.low flash point and high viscosityC.low heating value and high sulphur contentD.high heating value and low sulphur content
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KFP Co, a company listed on a major stock market, is looking at its cost of capital as it prepares to make a bid to buy a rival unlisted company, NGN. Both companies are in the same business sector. Financial information on KFP Co and NGN is as follows:NGN has a cost of equity of 12% per year and has maintained a dividend payout ratio of 45% for several years. The current earnings per share of the company is 80c per share and its earnings have grown at an average rate of 4·5% per year in recent years.The ex div share price of KFP Co is $4·20 per share and it has an equity beta of 1·2. The 7% bonds of the company are trading on an ex interest basis at $94·74 per $100 bond. The price/earnings ratio of KFP Co is eight times.The directors of KFP Co believe a cash offer for the shares of NGN would have the best chance of success. It has been suggested that a cash offer could be financed by debt.Required:(a) Calculate the weighted average cost of capital of KFP Co on a market value weighted basis. (10 marks)(b) Calculate the total value of the target company, NGN, using the following valuation methods:(i) Price/earnings ratio method, using the price/earnings ratio of KFP Co; and(ii) Dividend growth model. (6 marks)(c) Discuss the relationship between capital structure and weighted average cost of capital, and comment onthe suggestion that debt could be used to finance a cash offer for NGN. (9 marks)
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Wal-Mart has been criticized by some groups for its .（ ）[A] low service quality[B] employees' low salary[C] high pressure on the other companies[D] discrimination against women
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In restricted visibility the speed of a vessel without operational radar may be ________ enable effective avoiding action to be taken on sighting another ship．A.too low toB.too high toC.too high forD.too low for
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In restricted visibility the safe speed of a vessel without operational radar may be ________ enable effective avoiding action to be taken on sighting another ship．A.too low toB.too high toC.too high forD.too low for
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数据结构与算法里，折半查找中，low指向低端的记录，high指向高端的记录，每次计算中间位置mid的公式是（）。A、（lowhigh）/2B、（low+high）/2C、（low-high）/2D、low/2+high/2
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数字口可以输出（），可以输入（）。A、0（LOW）或1（HIGH）；0-1023B、0（LOW）或1（HIGH）；0.1023C、0（LOW）或1（HIGH）；0或1D、0（LOW）或1（HIGH）；0
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Which two scenarios would benefit the most from TCP Acceleration? （）(Choose two.)A、low-latency networksB、high-latency networksC、long-haul, low-bandwidth linksD、long-haul, high-bandwidth links
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Pipelines are not （）A、labor-intensiveB、capital-intensiveC、tech-intensiveD、low cost and high return
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单选题Operational amplifiers, used primarily in analog circuits, are characterized by（）A
high input impedance, high gain and low output impedanceB
high input impedance, high gain and high output impedanceC
low input impedance, low gain and high output impedanceD
low input impedance, high gain and low output impedance
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单选题A tropical cyclone has recurved and entered temperate latitudes. In the Northern Hemisphere when a large high pressure system lies north of the storm，what situation may occur?（）A
The low may suddenly deepen，and the cyclone intensify and pick up speedB
The left semicircle may become the dangerous semicircleC
The low and the high may merge and cancel out the weather characteristics of eachD
The high may force the cyclone to reverse its track
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单选题In restricted visibility the speed of a vessel without operational radar may be（）enable effective avoiding action to be taken on sighting another ship.A
too low toB
too high toC
too high forD
too low for
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单选题A company’s efforts to keep expenses low and profits high may result in _____.A
reduction in the number of employeesB
improvement of working conditionsC
fewer disputes between labor and managementD
a rise in workers’ wages
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问答题Do you think it is wise for a company to set a low price to attract customers? Why or why not?
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单选题Compared to a low pressure system，generally the air in a high is（）.A
warmer，less dense，and less stableB
cool，more dense，and drierC
muggy and cloudyD
extremely moist with high relative humidity
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单选题Two well-developed high pressure areas may be separated by a（）.A
Hill of low pressureB
Trough of low pressureC
Valley of low pressureD
Ridge of low pressure
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单选题A tide is called diurnal when（）.A
only one high and one low water occur during a lunar dayB
the high tide is higher and the low tide is lower than usualC
the high tide and low tide are exactly six hours apartD
two high tides occur during a lunar day
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单选题The direction of the surface wind is（）.A
directly from high pressure toward low pressureB
directly from low pressure toward high pressureC
from high pressure toward low pressure deflected by the earth's rotationD
from low pressure toward high pressure deflected by the earth's rotation
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