Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN: 9781337115773
Author: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Concept explainers
Videos
Question
Chapter 15, Problem 8MCQ
To determine
Identify the ratio that F and T would be interested in, to know about high dividend yielding stocks.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Understanding the returns from investing
When buying stock, you can expect to earn money through future current income (from____________________________Â Â Â ) and future capital appreciation (from_______________________________Â Â Â ). Together, your total earnings from a given investment can be expressed in terms of the approximate yield. This value makes it easier for you to compare investment options.
Â
Understanding the Approximate Yield Equation
The formula for the approximate yield of an investment can look intimidating, but it’s really just a function of three things: (1) average current income, (2) average capital gains, and (3) the average value of the investment. Based on the information in the table, compute each of these values for the two stocks over a 3-year period and enter the values into the bottom half of the table.
Â
Stock 1
Stock 2
Expected average annual dividends (2012–2014)
$1.00
$2.70
Current stock price
$55
$117
Expected future stock…
Mari is concerned about cash flow returns.
She wants to know how much she gets in
actual cash payback for every dollar she has
invested in a stock. Which ratio should she
use to find out what she wants to know?
Earnings per share
Dividends per share
Dividend yield
Dividend payout rate
Price-to-earnings ratio
You have a new job as a Financial Planning assistant. Your client wants to invest money in stocks, bonds, and treasuries that have the dividend yields shown in the table
below. Your job is to allocate their money across these three investments such that the total dollars of stocks is at least $10,000 less than the total dollars in bonds plus
treasuries. In addition, they have identified the maximum investment in each of those three investment types (also shown below). Maximize the dividends earned.
Your answer will be the amount invested in Stocks (rounded to whole dollars).
Use Scenario 3
Stocks: yield %
Bonds: yield %
Treasuries: yield %
Stocks: $ max
Bonds: $ max
Treasuries: $ max
Scenario 1
2.22
2.04
1.93
170,000
60,000
50,000
Scenario 2
1.71
1.98
1.88
400,000
180,000
200,000
Scenario 3.
1.14
3.03
2.08
410,000
300,000
75,000
Scenario 4
1.25
1.48
2.55
800,000
280,000
500,000
Chapter 15 Solutions
Managerial Accounting: The Cornerstone of Business Decision-Making
Ch. 15 - Name the two major types of financial statement...Ch. 15 - Prob. 2DQCh. 15 - Explain how creditors, investors, and managers can...Ch. 15 - What are liquidity ratios? Leverage ratios?...Ch. 15 - Prob. 5DQCh. 15 - Prob. 6DQCh. 15 - Prob. 7DQCh. 15 - A high inventory turnover ratio provides evidence...Ch. 15 - A loan agreement between a bank and a customer...Ch. 15 - Prob. 10DQ
Ch. 15 - Explain why an investor would be interested in a...Ch. 15 - Prob. 12DQCh. 15 - Prob. 13DQCh. 15 - When a company participates in a stock buyback...Ch. 15 - Explain the significance of the inventory turnover...Ch. 15 - In a JIT manufacturing environment, the current...Ch. 15 - Prob. 1MCQCh. 15 - Prob. 2MCQCh. 15 - Fractions or percentages computed by dividing one...Ch. 15 - Prob. 4MCQCh. 15 - Pedee Companys inventory turnover in days is 80...Ch. 15 - Prob. 6MCQCh. 15 - Prob. 7MCQCh. 15 - Prob. 8MCQCh. 15 - A small pizza restaurant, founded and owned by the...Ch. 15 - Prob. 10MCQCh. 15 - Prob. 11BEACh. 15 - Scherer Company provided the following income...Ch. 15 - Chen Company has current assets equal to...Ch. 15 - Last year, Nikkola Company had net sales of...Ch. 15 - Last year, Nikkola Company had net sales of...Ch. 15 - Paxton Company provided the following income...Ch. 15 - Ernst Companys balance sheet shows total...Ch. 15 - Prob. 18BEACh. 15 - Prob. 19BEACh. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - Jasmine Company provided the following income...Ch. 15 - Jasmine Company provided the following income...Ch. 15 - LoLo Lemon Company has current assets equal to...Ch. 15 - Last year, Tobys Hats had net sales of 45,000,000...Ch. 15 - Last year, Tobys Hats had net sales of 45,000,000...Ch. 15 - Alessandra Makeup Manufactures provided the...Ch. 15 - Klynveld Companys balance sheet shows total...Ch. 15 - Prob. 31BEBCh. 15 - Prob. 32BEBCh. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - The income statement, statement of retained...Ch. 15 - Sundahl Companys income statements for the past 2...Ch. 15 - Sundahl Companys income statements for the past 2...Ch. 15 - Cuneo Companys income statements for the last 3...Ch. 15 - Cuneo Companys income statements for the last 3...Ch. 15 - Prob. 41ECh. 15 - Upton Company has current assets equal to...Ch. 15 - Montalcino Company had net sales of 54,000,000....Ch. 15 - Whalen Company had net sales of 125,500,250,000....Ch. 15 - Prob. 45ECh. 15 - Prob. 46ECh. 15 - Bryce Company manufactures pet supplies. However,...Ch. 15 - Prob. 48ECh. 15 - Prob. 49ECh. 15 - Juroe Company provided the following income...Ch. 15 - Juroe Company provided the following income...Ch. 15 - Juroe Company provided the following income...Ch. 15 - Rebert Inc. showed the following balances for last...Ch. 15 - Rebert Inc. showed the following balances for last...Ch. 15 - Rebert Inc. showed the following balances for last...Ch. 15 - The following selected information is taken from...Ch. 15 - Grammatico Company has just completed its third...Ch. 15 - The following information has been gathered for...Ch. 15 - Mike Sanders is considering the purchase of Kepler...Ch. 15 - Prob. 60PCh. 15 - Mike Sanders is considering the purchase of Kepler...Ch. 15 - Mike Sanders is considering the purchase of Kepler...Ch. 15 - Mike Sanders is considering the purchase of Kepler...Ch. 15 - Albion Inc. provided the following information for...Ch. 15 - Prob. 65PCh. 15 - Prob. 66PCh. 15 - Prob. 67C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- You have some funds that you would like to invest. Do some internet research to find two publicly traded companies in the same industry and compare their earnings per share. Would the earnings per share reported by each company influence your decision in selecting which company to invest in?arrow_forwarda) Provide the definition for personal financial planning and list all the specific advantages of personal financial planning. b) Opportunity cost can be viewed from two aspects. Explain each aspect with relevant examples. c) Fahmi decides to invest in a corporate bond of a certain company because he is after the coupon payment that he will receive throughout the bond period. Identify and elaborate the factor that driven him to make that decision. d) Before Taufiq make his investment decision, he realize the importance for investor to evaluate the risk factor when choosing an investment. Explain to him ANY TWO (2) components of risk factor.arrow_forwardYou have some funds that you would like to invest and you are relying heavily on the EPS calculation to help you make your decision. Initially you are baffled about why preferred dividends are subtracted in the numerator and why a weighted average is used in the denominator, so you do some research and reflection and come to understand why. Your friend is interested in hearing about your thought process. How would you explain to your friend why its important to subtract preferred dividends and to use weighted averages?arrow_forward
- Suppose you visit with a financial adviser, and you are considering investing some of your wealth in one of three investment portfolios: stocks, bonds, or commodities. Your financial adviser provides you with the following table, which gives the probabilities of possible returns from each investment: Stocks Bonds Commodities Probability Return Probability Return Probability Return 20% 15% 0.15 20% 0.6 10% 0.2 0.2 12.5% 0.4 7.5% 0.2 0.25 0.2 0.4 3.8% 0.2 0.2 0% To maximize your expected return, you should choose O A. commodities. B. bonds. OC. stocks. OD. All of the portfolios have the same expected returnarrow_forwardMary owns a risky stock and anticipates earning 16.5 percent on her investment in that stock. Which one of the following best describes the 16.5 percent rate? Select one: A. Market rate B. Expected return C. Systematic return D. Real returnarrow_forwardThe Expected Rate of Profit Formula looks at:   A. Expected Profit & Money Invested  B. Common Stock & Preferred Stock  C. Expected Profit & Bonds  D. All of the abovearrow_forward
- My class is called Quantitative analysis, so I believe it falls under Statistics. My question is: As a financial advisor, you are assigned a new client who is considering investing in one of two stocks, A or B. The table below shows information about the performance of stocks A and B last year.  Return Standard Deviation Stock A 15 % 8.3% Stock B 14% 2.1% As a financial advisor, are there factors other than return and risk that should be considered in making this decision? Based on these factors, what stock would you recommend to the client? What reasons will you convey to your client to justify your decision in recommending this stock? How will this recommendation impact the client? I just need help with part 4arrow_forwardHow do you determine the Cost of Equity? Ask your stockholders, or their representatives on the Board of Directors Take the risk-free rate and add the product of your equity beta and the market risk premium Multiply your cost of debt by 1 minus the tax rate Subtract your cost of debt from your WACCarrow_forward1. The percentage measure of how well an investment is doing and is often used as the basis for comparison with other investments is the _____. A. dividend yield B. price-earning ratio    C. return on equity D. return on investment  2. Ricardo invested a lump sum of $11,500 in a mutual fund with an offer price of $12.33. How many shares did he purchase? (Round to the nearest thousandth.) A. 839.206 B. 932.685    C. 1,073.401 D. 1,352.035arrow_forward
- 1. Choose the best definition for a Stock? A. Being a creditor to a company B. Robin Hood C. Ownership shares of a company D. Voting shares in a company E. Ownership shares of a public company  2. When investing in stocks, there are two ways in which you can have a positive return. What are the components of this return called? A. Dividends and Capital Loss B. Robin Hood C. Coupon and Capital Gains D. Coupon and Capital Loss E. Dividends and Capital Gainsarrow_forwardRachel is a financial investor who actively buys and sells in the securities market. Now she has a portfolio of all blue chips, including: $13,500 of Share A, $7,600 of Share B, $14,700 of Share C, and $5,500 of Share D. (a) Compute the weights of the assets in Rachel’s portfolio?(b) Find the geometric average return (c)Find the risk free rate of return (d)Find the expected rate of return of the portfolioarrow_forwardA measure of profitability analysis is a. times interest earned. b. cash flow per share. c. quick ratio. d. dividend payout ratio. would d be the right answer for this question?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax College
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY