Question

In-Class Exercise - Accounting Review 10. Angie Animal House had current assets of $55,300 and current liabilities of $47.950 last year. This year, the current assets are $80,400 and the current liabilities are $82,100. The depreciation expense for the past vear is $10,600 and the interest paid is $7.800. What is the amount of the change in net working capital (NWC)? Chapter 3 - Analysis of Financial Statements 11. Bloom Car Rental's sales last year were $415,000, and its year-end total assets were $355,000. The average firm in the industry has a total assets turnover ratio (TATO) of 2.4. Bloom's new CFO believes the firm has excess assets that can be sold so as to bring the TATO down to the industry average without affecting sales. By how much must the assets be reduced to bring the TATO to the industry average, holding sales constant? 12. Whampoa Corp. has zero debt - it is financed only with common equity. Its total assets are $410,000. The new CFO wants to employ enough debt to bring the debt/assets ratio to 40%, using the proceeds from the borrowing to buy back common stock at its book value. How much must the firm borrow to achieve the target debt ratio? 13. Ormond Cake Shop's sales last year were $435,000, its operating costs were $362,500, and its interest charges were $12,500. What was the firm's times interest earned (TIE) ratio? 14. Mario LLC has total assets of $625,000. Its total debt outstanding is $185,000. The Board of Directors has directed the CFO to move towards a debt-to-assets ratio of 55%. How much debt must the company add or subtract to achieve the target debt ratio? 15. LeCompte Corp. has $312,900 of assets, and it uses only common equity capital (zero debt). Its sales for the last year were $620,000, and its net income was $24.655. Stockholders recently voted in a new management team that has promised to lower costs and get the return on equity up to 15%. What profit margin would LeCompte need in order to achieve the 15% ROE, holding everything else constant? 16. Last year Urbana Corp. had $197,500 of assets, $307,500 of sales, $19,575 of net income, and a debt-to-total-assets ratio of 37.5%. The new CFO believes a new computer program will enable it to reduce costs and thus raise net income to $33,000. Assets, sales, and the debt ratio would not be affected. By how much would the cost reduction improve the ROE? 17. Emerson Inc.'s would like to undertake a policy of paying out 45% of its income. Its latest net income was $1,250,000, and it had 225,000 shares outstanding. What dividend per share should it declare? 18. Stewart Inc.'s latest EPS was $3.50, its book value per share was $22.75, it had 215,000 shares outstanding, and its debt-to-assets ratio was 46%. How much debt was outstanding? 19. Last year Vaughn Corp. had sales of $315,000 and a net income of $17,832, and its year-end assets were $210,000. The firm's total-debt-to-total-assets ratio was 42.5%. Based on the DuPont equation, what was Vaughn's ROE? 20. Last year Mason Inc. had a total assets turnover of 1.33 and an equity multiplier of 1.75. Its sales were $195.000 and its net income was $10,549. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $5,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income in this amount, by how much would the ROE have changed?

pls do from 14 to 20

Answer 1

The answers have been provided for only question nos. 14 to 20.

Other questions are not answered as requested.

Q1f) Total Aneti of Mario LLC - $625,000. Total Debti of Mario LLC = # 185,000. Required - Additional Deble to be brought by Mario L. Debts - to- Amets Ratio = Total Debts. Total Assets 55- = Total Debte 625,000 Total Debts to be maintained = $ 343,750. Requined Debts to be brought in - Debts to be maintained - Debter Outstanding = $343,750 - # 185.000 Excem Debts to be brought in - $ 158,750 2. 99

Q15) Total Assets el Le Compte Comp - $312,900 Net Income = 24,655 Return on Equity expected] - 15% " Return on Equity = Net Income Total Equity. Net Income 312,900 → Net Income (Enfected) = $ 46,935 15 % Extra profit margin to be maintained Expected Income - Net Income of a Previous Year = $46,95 $24,655 - $ 22,280 Note - It is assumed that the total Eagliny Assets is after setting of liabilities (if any.). . Total Asset - Total Equity..

Q167) Total Assets of Urbana Corp = $ 197,500 : Debts-to-Assets Ratio = Total Debts Total Asseh. - Total Debts - Total Assets & Debt-to-Asset Ratio 97,600 197,500 x 37.5). $ 740 62.5 1. Total Equity = Total Asset - Total Debts. - $123,437.5 191500 - 440625 i7 Return on Equity (OLD) = Net Income Cold) Total Equity ROE COLD) = 19.575 123475.5 15.85 / ood ily Return on Equity (NEW) = Net Income (New) Total Equity 19,575 + 33,000 - 52.575 -42.58 123,475.5 123475.5 ROE (NEW) = Hoc.soooo ivy Change in ROE = ROE (New) - ROE (OLD) = 42.58 – 15,85 26.73% & Impact on ROE will be 26.73%.

Q17) Net Income of Emerson Inel Share Outstanding = = 1,250,000 225,000 Shaw Dividend Payout - Net Income - 1,250,000 $562,500 x Payout / 45% Dividend Payout Dividend Per Share & Total Dividend - $562,500 Shows Outstanding 395,000 2.5 Q187 Book Value / share = $22.75 Shaw Outstanding = 215,000. is Total Assets Shams Outstanding = Book Value / share & = 22.15 x 215,000 - # 4891250 - Debts to Asset Ratio Outstanding = Total Assets & Debih - $4,891,250 x 46% - $2,249,975

Total Sales Total Assets Net Income - 315,000 = 210.000 - 17,882. Q19) As pu DuPont Equation, ROE - x Roe - Net Income Sales 17,832 3,15,000 17,832 1,20,750 14.77% Salu x Total Assch 3.15,000 210,000 Total Asseti Aug, Shareholden Sandh (Equity x 2,10,000 (2,10,000) [100- 42.5 A] [WN x - ROE = Working Note 1.- Aug. Share holdus Funds. Shareholdin fundy = Total Assets & 100 - (Debts to Asseti Ratio) = 2.10000 x 100 - 4250) = 120750 Q 207 An bur Du Pont Equation. ROE = Net Income x Total Assets Turnover & Equity Multiplics sales Equity Ratio in Cap. Structe ROE (02) - 10,549 x 1.33 X 1.15 195.000 RO ECOLD) = 12.59.14 → ROE (NEW) = (0,549 +5,250) , 1.33x115 195.000 - 18.86% Net Impact on ROE = 18.86% - 19.59% 6.27% increase