Question
The company plans to efficiently maintain the assets in the long run. The average total assets of the firm are $45,000. The firm also plans
The company plans to efficiently maintain the assets in the long run. The average total assets of the firm are $45,000. The firm also plans to cover the solvency ratios in a reasonable manner to seek additional refinancing from the capital providers. The company has 50,000 shares outstanding. The company plans to raise more capital by issuing shares. The companys ROE has been determined to be 10% which is likely to go up in the next year. The company is concerned about the profitability ratios of the company and it is seeking your advice to improve them. The sales of the recent quarter of 2019 have gone down to $5,800 whereas the net earnings are $ 3,200. The company is planning to expand in the future. It is planning to open one more branch in the Greater Vancouver region. The shareholders, Board of Directors (BOD) and the managers may have a disagreement on its decision though. 4. What is the Asset turnover for the company? 5. Calculate the TIE ratio and also respond whether it is satisfactory or not? 6. How will issuing more shares affect the capital structure of the company? 7. What does the firm need to do to raise its ROE? 8. Calculate the profit margin ratio of the company and comment on the profitability performance of the company. 9. What type of financial decision is the company making with the expansion? 10. The disagreement among the shareholders, BOD and the managers is popularly points to what in finance?
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