Question

Use the following table, which provides historical data for Snacksco, a manufacturer of snack foods, to answer the next four questions. Assume an operating tax rate of 30 percent and a cost of capital of 9 percent. Income statement Year 1 Year 2 Revenues 540.0 555.0 Cost of sales Selling general, and administrative (350.0) (360.5) (50.5) (50.0) Depreciation (10,0) (10.5) EBIT 130.0 133.5 Interest expense (7.5) (7.5) Gain/(loss) on sale of assets (30.0) Earnings before taxes 96.0 - 122.5 (24.8) 97.7 Taxes (215) 74.5 Net income Balance sheet Year 1 Year 2 10.6 15.0 Operating cash Excess cash and marketable securities 102.8 100.0 Accounts receivable 90.0 94.5 150.0 157.5 Inventory Current assets 353.4 367.0 206.7 219.8 Property, plant, and equipment 180.0 180.0 Equity investments 740.1 766.8 Total assets 116.6 119.6 Accounts payable

Answer 1

You have asked 4 unrelated questions in the same post. I have answered the first one. Please post the balance questions one by one separately.

Q - 6

Operating margin in year 2 = EBIT / Revenue = 133.5 / 555 = 24.0%

Hence, the correct answer is option c)