Tutorial 01 - NUS Business School FIN2004 Finance Tutorial 1#1 Evaluate the following statement Managers should not focus on the current stock value

Tutorial 01 - NUS Business School FIN2004 Finance Tutorial...

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1 NUS Business School FIN2004 Finance Tutorial 1 #1: Evaluate the following statement: Managers should not focus on the current stock value because doing so will lead to an overemphasis on short-term profits at the expense of long-term profits. #2: Suppose you own stock in a company. The current price per share is $25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. Your company’s management immediately begins fighting off this hostile bid. Is the management acting in the shareholders’ best interest? Why or why not? #3: Firm A and Firm B have debt/total asset ratios of 35% and 30% and returns on total assets of 12% and 11% respectively. Which firm has a greater return on equity? #4: Sherwood Inc.’s net income for the most recent year was $13,168. The tax rate was 34%. The firm paid $3,605 in total interest expense and deducted $2,382 in depreciation expense. What was the cash coverage ratio for the year?
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  • Spring '11
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  • Finance, Balance Sheet, Financial Ratio, Generally Accepted Accounting Principles, Smolira¬†Golf, smolira golf corp.

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