(Coverage ratio) A firm’s latest 12 months’ EBIT is $30 million, and its interest expense for the same period is $10 million. Calculate the interest coverage ratio.
o
o
o Ch. 17: Question 4
A firm’s capital structure consists solely of debt and common equity. What form would an exchange offer take if the firm believes it is (a) overleveraged? (b) underleveraged?
Ch. 18: Questions 1,3,7
Consider the following four dates: April 10, April 24, April 27, and May 5. Which is the: (a) ex-dividend date, (b) record date, (c) payment date, (d) declaration date?
Briefly explain why the signal of paying a dividend can cause dividend policy to affect a firm’s value.
What is the difference between a stock dividend and a stock split, and what conditions make one more likely to be used than the other?
Ch. 20: Questions 1,2
Describe the difference between secured and unsecured debt.
Explain the role of debt covenants, and cite three examples.
o
o Ch. 21: Questions 1,2
Define the terms lease, lessor, and lessee. What is the relationship between a lessor and a lessee?
What are the principal advantages and principal disadvantages of lease financing? Which of the purported advantages are really of dubious value?
