FINANCE I #4 DUE TOMORROW AT 7AM EST PLAGIARISM FREE / QUALITY WORK

profilesantth

 

 

ADDRESS ALL PAPER REQUIREMENTS - QUALIY WORK

 

Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $35 million in fixed assets in its operations next year, provided the level of current assets, anticipated sales, and EBIT for next year are $60 million and $6 million, respectively. The organization’s income tax rate is 40%. Stockholders’ equity will be used to finance $40 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies in the diagram.

 

 

 

Amount of Short-Term Debt

 

 

 

Financial Policy

Millions of dollars

LTD (%)

STD (%)

Aggressive
(large amount of short-term debt)

$24

8.5

5.5

Moderate
(moderate amount of short-term debt)

$18

8.0

5.0

Conservative
(small amount of short-term debt)

$12

7.5

4.5

 

 

 

Determine the following for each policy:

 

 

 

·         Expected rate of return on stockholders’ equity

 

·         Net working capital position

 

·         Current ratio

 

 

 

Write a 1,750-word paper in which you evaluate profitability versus risk trade-offs of these policies. Would you rate them low, medium, or high with respect to profitability? Would you rate them low, medium, or high with respect to risk? 

 

 

 

Format your paper consistent with APA guidelines.

 

    • 8 years ago
    • 12
    Answer(3)

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      finance4.doc

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      fin_419_week_4_individual_paper.zip

    Purchase the answer to view it

    blurred-text
    NOT RATED
    • attachment
      fin_419_complete_course.zip
    Bids(1)