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Finance - Scott Equipment Organization

Question # 00052581
Subject: Foreign Languages
Due on: 03/18/2015
Posted On: 03/07/2015 12:54 PM

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Scott Equipment Organization is investigating various combinations of short- and long-term debt in financing assets. Assume the organization has decided to employ $30 million in current assets and $35 million in fixed assets in its operations next year, provided the level of current assets, anticipated sales, and EBIT for next year are $60 million and $6 million, respectively. The organization’s income tax rate is 40%. Stockholders’ equity will be used to finance $40 million of assets, with the remainder financed by short- and long-term debt. The organization is considering implementing one of the policies in the diagram.
Amount of Short-Term Debt
Financial Policy Millions of dollars LTD (%) STD (%)
Aggressive (large amount of short-term debt) $24 8.5 5.5
Moderate (moderate amount of short-term debt) $18 8.0 5.0
Conservative(small amount of short-term debt) $12 7.5 4.5
Determine the following for each policy:
• Expected rate of return on stockholders’ equity
• Net working capital position
• Current ratio

Tags organization equipment scott finance aets million shortterm organization current rate debt year stockholders short longterm aggreive dollarsltd large debt24 millions debtfinancial policies diagramamount equipment 8555moderate policy debt188050conservativesmall working capital positioncurrent ratio equitynet return implementing

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Finance - Scott Equipment Organization (Sol)

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Finance_-_Scott_Equipment_Organization_(Sol).docx (12.44 KB)
Preview: option xx has xxxx rated as xxxx more liquidity xx moderate xxx xxxxxxxxxxxx as xxxxxxx to aggressive xxxxxxxxx On the xxxxx of xxx xxx return xx equity it xxxxx that Aggressive xxxxxx is xxxxxxxxxxx xxx the xxxxxx in all xxxxx options is xx narrow xxxx xxx can xxx any optionsWorking xx interest total xxxx required x.....
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