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Foundations Of Financial Management
Found in: Page 471
Foundations Of Financial Management

Foundations Of Financial Management

Book edition 16th
Author(s) Stanley B. Block, Geoffrey A. Hirt, Bartley Danielsen
Pages 768 pages
ISBN 9781259277160

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Short Answer

In which foreign industry has privatization been most important?

Telecommunication.

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Step by Step Solution

Privatization

The term privatization refers to the transfer of government or public-owned entities into the hands of private authorities for managing their operations.

Industry that requires privatization

Telecommunication is that foreign industry where privatization is considered most important because this industry includes critical and sensitive information.

In addition, private sectors run business operations with utmost discipline and provide efficient outcomes.

Most popular questions for Business-studies Textbooks

Question: The Bailey Corporation, a manufacturer of medical supplies and equipment, is planning to sell its shares to the general public for the first time. The firm’s investment banker, Robert Merrill and Company, is working with Bailey Corporation in determining a number of items. Information on the Bailey Corporation follows:

Bailey corporation

Income statement

For the year 20X1

Sales (all on credit)

$42,680,000

Cost of goods sold

$32,240,000

Gross profit

$10,440,000

Selling and administrative expenses

$4,558,000

Operating profit

$5,882,000

Interest expense

$600,000

Net income before taxes

$5,282,000

Taxes

$2,120,000

Net income

$3,162,000

Bailey corporation

Balance sheet

As of December 31, 20X1

Assets

Current assets:

Cash

$250,000

Marketable securities

$130,000

Accounts receivables

$6,000,000

Inventory

$8,300,000

Total current assets

$14,680,000

Net plant and equipment

$13,970,000

Total assets

$28,650,000

Liabilities and stockholders’ equity

Current liabilities:

Accounts payable

$3,800,000

Notes payable

$3,550,000

Total current liabilities

$7,350,000

Long-term liabilities

$5,620,000

Total liabilities

$12,970,000

Stockholder’s equity:

Common stock (1,800,000 shares at $1 par)

$1,800,000

Capital in excess of par

$6,300,000

Retained earnings

$7,580,000

Total stockholder’s equity

$15,680,000

Total liabilities and stockholder’s equity

$28,650,000

a. Assume that 800,000 new corporate shares will be issued to the general public. What will earnings per share be immediately after the public offering? (Round to two places to the right of the decimal point.) Based on the price-earnings ratio of 12, what will the initial price of the stock be? Use earnings per share after the distribution in the calculation.

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