Question

Which financial products would be beneficial for a corporation that is small, gross profit margin of...

Which financial products would be beneficial for a corporation that is small, gross profit margin of 31%, inventory turnover ratio of .35, and a debt ratio of 71%? Why?   

I was thinking bonds because of the fixed interest rates and the low sales but the fact that they have potential to grow.

Homework Answers

Answer #1

Ans: Since corporation is small at this point of time with a very healthy Gross profit margin to sales and also having adequate debt ratio, I would recommend that corporation should go for either bonds or convertible debentures. In bonds company will have to bear the interest expenses, which can be managed since corporations has healthy Gross profit margin.

In convertible debentures, if corporation choses to go than in that case company has to bear the int. exp till the time period of debentures are not allowed as to be converted ito shares, the time period is generally 10 to 15 years. and this period corporation may grow up big and in that case it can afford to have equity hence debentures can easily be converted into equity and corporation will not need to pay out the debentures.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Ivanhoe Inc. has sales of $2,700,000, a gross profit margin of 35.0 percent, and inventory of...
Ivanhoe Inc. has sales of $2,700,000, a gross profit margin of 35.0 percent, and inventory of $1,000,000. What are the company’s inventory turnover ratio and days’ sales in inventory? (Round inventory turnover ratio to 3 decimal places, e.g. 12.555 and days' sales in inventory to 1 decimal place, e.g. 12.5. Use 365 days for calculation.) Inventory turnover ratio times Days’ sales in inventory days
what are the formulas a. Current Ratio b. Leverage Ratio (financial leverage) c. Gross Profit (Gross...
what are the formulas a. Current Ratio b. Leverage Ratio (financial leverage) c. Gross Profit (Gross Margin on the site) d. Return on Equity e. Return on Assets f. Return on Sales h. Asset Turnover I.Inventory Turnover
Cullumber Corp. has a gross profit margin of 40.00 percent, sales of $39,000,000, and inventory of...
Cullumber Corp. has a gross profit margin of 40.00 percent, sales of $39,000,000, and inventory of $15,600,000. What is its inventory turnover ratio? (Round answer to 2 decimal places, e.g. 15.25.)
Which of the following is a financial strength ratio? A. Profit Margin B. Gross margin C....
Which of the following is a financial strength ratio? A. Profit Margin B. Gross margin C. Debit/ Equity D. None of the Above
NIKE Industry Ratios 5/31/2019 5/31/2018 5/31/2017 5/31/2016 Gross Profit Margin 44.67% 43.84% 44.58% 46.24% 38.02% Operating...
NIKE Industry Ratios 5/31/2019 5/31/2018 5/31/2017 5/31/2016 Gross Profit Margin 44.67% 43.84% 44.58% 46.24% 38.02% Operating Profit Margin 12.20% 12.21% 13.83% 13.91% 13.08% Net Profit Margin 10.30% 5.31% 12.34% 11.61% 12.57% Return on Assets 16.99% 8.58% 18.23% 17.59% 23.83% Return on Equity 45.74% 19.52% 33.60% 31.49% Current Ratio 210.08% 250.56% 293.41% 280.42% 270.00% Quick Ratio 138.61% 163.46% 201.06% 190.13% 92.00% Debt to Total Assets Ratio 61.88% 56.46% 46.66% 42.66% Debt to Equity Ratio 166.61% 128.47% 85.99% 76.39% Average Collection Period...
Coca-Cola Purpose Financial ratio analysis is one of the best techniques for identifying and evaluating internal...
Coca-Cola Purpose Financial ratio analysis is one of the best techniques for identifying and evaluating internal strengths and weaknesses. Potential investors and current shareholders look closely at firms’ financial ratios, making detailed comparisons to industry averages and to previous periods of time. Financial ratio analyses provide vital input information for developing an IFE Matrix Financial Ratios for Coca-Cola (2018) Liquidity Ratios: - Current ratio: - Quick ratio: Leverage Ratios: - Debt-to-total-assets ratio: - Debt-to-equity ratio: - Long-term debt-to-equity ratio: -...
. Consider the following financial statement data (in millions of dollars): Gross profit, $6; Total    ...
. Consider the following financial statement data (in millions of dollars): Gross profit, $6; Total     debt = Stockholders’ equity; Sales, $30; Tax rate, 50%; Total assets, $20; Earnings before    taxes, $8. (Note: Each answer below should report either 1 or 2 decimal places.) [17 points]             (a) Calculate the gross profit margin ratio using financial statement data.b) Calculate the net profit margin ratio using financial statement data.(c) Calculate the debt ratio using financial statement data.(d) Calculate the return...
Consider the following financial statement data (in millions of dollars): Gross profit, $6; Total     debt...
Consider the following financial statement data (in millions of dollars): Gross profit, $6; Total     debt = Stockholders’ equity; Sales, $30; Tax rate, 50%; Total assets, $20; Earnings before    taxes, $8. (Note: Each answer below should report either 1 or 2 decimal places.) [17 points]             (a) Calculate the gross profit margin ratio using financial statement data.             (b) Calculate the net profit margin ratio using financial statement data.                                                                                                                                        (c) Calculate the debt ratio using financial...
Eleanor’s Computers is a retailer of computer products. Using the financial data provided, financial ratio calculations...
Eleanor’s Computers is a retailer of computer products. Using the financial data provided, financial ratio calculations for 2016. Advise management of any ratios that indicate potential problems and provide an explanation of possible causes of the problems. 2016 Current ratio 725,000/ 475,000 = 1.53X vs Industry Average 1.70X Quick ratio 400,000/475,000 = 0.84X vs Industry Average 0.95X Average collection period 275,000 – 1,500,000/ 365 days = 67 Days vs Industry Average 65 Day Inventory turnover 1,200,000/325,000 = 3.69X vs Industry...
The financial statements of Sun Corporation appear below: Sun Corporation Comparative Balance Sheets December 31, 2017...
The financial statements of Sun Corporation appear below: Sun Corporation Comparative Balance Sheets December 31, 2017 - 18 —————————————————————————————————— Assets                                                                         2018                 2017                                                                                                  Cash                                                                       $ 75,000          $ 150,000 Short-term investments                                            75,000             225,000 Accounts receivable (net)                                      150,000             112,500 Inventory                                                                225,000             262,500 Property, plant and equipment (net)                      975,000          1,125,000             Total assets                                              $1,500,000      $1,875,000 Liabilities and stockholders' equity Accounts payable                                                  $ 75,000          $ 112,500 Short-term...