Search Results: 'common stock outstanding'
Calculation of Current Stock Price
"Based on the corporate valuation model, Morgan Inc.’s value of operations is $300 million. The balance sheet shows $90 million of notes payable, $30 million of long-term debt, $40... More > million of preferred stock, and $100 million of common equity. The company has 10 million shares of stock outstanding. What is the best estimate of the stock’s price per share?
Convertible securities are popular among investors who want a fixed (well-defined) interest income but also an upside potential. The convertible feature opens up the possibility of large gains for... More > investors if the stock rapidly appreciates in value. There is only a small probability of large losses because of the security’s bond characteristics.< Less
Financial Statement Analysis Earnings
"Southland Industries has $60,000 at 16% (annual interest) bonds outstanding, 1,500 shares of preferred stock paying an annual dividend of $5 per share, and 4,000 shares of common stock... More > outstanding. Assuming that the firm has a 40% tax rate, compare Earnings per share (EPS) for the following levels of EBIT:
Calculation of EBIT and EPS Indifference Point
"a. Calculate the EBIT-EPS indifference point.
b. Graphically determine the EBIT-EPS indifference point. Hint: use EBIT= $10 million and $25 million.
c. What happens to the... More > indifference point if the interest rate on debt increases and the common stock sales price remains constant?
Determining Activity Cost
"a) Compute the Earnings before interest and taxes (EBIT) for each level of sales.
b) Compute the Earnings per share (EPS) for each level of sales, the expected EPS, the standard deviation of... More > the EPS, and the coefficient of variation of EPS, assuming that there are $10,000 shares of common stock outstanding,
c) Tower has the opportunity to reduce its leverage to zero and pay no interest. This will require that the number of shares outstanding be increased to $15,000. Repeat part b under this assumption.
d) Compare your findings in parts b and c, and comment on the effect of the reduction of dept to zero on the firm’s financial risk.