The DJH Corporation just paid a dividend of $1.74. It expects its cash dividends to grow 4.1%
per year forever. DJH has a debt ratio of L = 44%. Its borrowing rate is rd = 7.2%. DJH pays
corporate taxes at the rate of 43%, rf = 4.6%, rM = 9.1%,
The demand for a commodity is 60,000 units a year, at a steady rate. It costs $30 to place an
order, and 56c to hold a unit for a year. Find the order size to minimize inventory costs, the
number of orders placed each year, the length of the
What is meant by over trading?
Overtrading happens when a business tries to do an excess of too rapidly with too minimal long
term capital, so it is attempting to bolster too huge a volume of exchange with the capital assets
available. It is normally when
What is meant by economic order quantity (EOQ)?
Economic order quantity is a tool used by organizations which have to order and hold huge
inventories to cope with the uncertain demands of their products. Most manufacturing
organizations have issues relate
What is meant by over-capitalization?
When there are excessive current assets and low accounts payables then it is assumed that huge
amount of net current assets has been tied up in working capital. This situation is called over
Why funds are required for investment in current assets?
These liquidity ratios are a used as a tool to assess risk of cash flow troubles and insolvency. A
company may face insolvency risks if some of the current liabilities are no longer supporte
What is meant by payment period or accounts payable days? How it is calculated? Explain by
By account payable days or payment period means that the time allowed by the supplier to a
business to pay its debts against credit purchases. The
What is meant by collection period or account receivable days? How it is calculated? Explain by
By collection days or accounts receivables days it means the period allowed by a business to its
credit customers to pay for credit sales. The collect
What is meant by inventory days? How it is calculated? Explain by example?
By inventory days or inventory holding period means that the time required from acquiring raw
material, converting them to finished goods and then holding them until they a
What is concept of working capital and what are objectives of working capital management?
The working capital is the companys minimum amount of net liquid resources tied up in shape
of current assets such as accounts receivables, inventories and m
Why different businesses have different working capital characteristics?
Consider three different businesses. One is a departmental store, second is a whole seller and
third is a small shop keeper. All three of these businesses will have different