Using the same information listed below, answer the q. 42 that follows.
Income Statement
For the year of: Year 1 Year 2
Sales $2,400,000 $3,000,000
Cost of Sales $ 720,000 $ 960,000
Gross Profit XXXXXXX (31)
Payroll Expenses $ 600,000 $ 720,000
Gen. & Admin. Exp. $ 288,000 $ 360,000
Other Expenses $ 225,000 $ 336,000
EBIT $ (32) $ 624,000
Interest $ 15,000 $ 24,000
EBT $ (33) (34)
Income Taxes (40%) $ (35) $ (36)
Net Income $ (37) $ (38)
========================================
Balance Sheets
On December 31 of
Year 0 Year 1 Year 2
Total Assets: $1,000,000 $1,400,000 $_____(39)
Curr. Liability $ 50,000 $ 100,000 $ 120,000
L/T Liability $ 450,000 $ 300,000 $ 480,000
Owners’ Equity $ (40) $1,000,000
1. Determine the growth rate (in %) of the company’s revenues in Year 2 from those of Year 1.
2. In which year (Y-1 or Y-2) did the company conduct its overall cost control (for the entire operations) better?
3. Which year’s (Y-1 or Y-2) investment (into assets) was more effectively used in generating revenues?
4. Which ratio has been asked in the previous question (2).
5. What is the rate (%) of return on the company’s investment in Year 2?
6. What is the rate (%) of return the company has contributed to its owners’ investment in Year 2?
7. Which ratio was asked in the previous question (5)
8. Which ratio was asked in the previous question (6)
9. If the company (that you have analyzed in the previous questions) achieve the same rate of growth in Revenues (Sales) in the Year 3, what is the expected amount of Revenues?
| Income statement | |||
| Y1 | Y2 | ||
| Particulars | $ | $ | |
| Sales | 2,400,000.00 | 3,000,000.00 | |
| Cost of sales | 720,000.00 | 960,000.00 | |
| Gross profit | 1,680,000.00 | 2,040,000.00 | |
| Payroll Expenses | 600,000.00 | 720,000.00 | |
| General & Admin Expense | 288,000.00 | 360,000.00 | |
| other Expense | 225,000.00 | 336,000.00 | |
| EBIT | 567,000.00 | 624,000.00 | |
| Interest | 15,000.00 | 24,000.00 | |
| EBT | 552,000.00 | 600,000.00 | |
| Income Tax-40% | 220,800.00 | 240,000.00 | |
| Net income | 331,200.00 | 360,000.00 | |
| Balance sheet as on Dec | |||
| Y0 | Y1 | Y2 | |
| Particulars | $ | $ | $ |
| Total Asset | 1,000,000.00 | 1,400,000.00 | 1,680,000.00 |
| Current Liability | 50,000.00 | 100,000.00 | 200,000.00 |
| L/T Liability | 450,000.00 | 300,000.00 | 480,000.00 |
| Owners Equity | 1,000,000.00 | 1,000,000.00 | |
1.8.69%
2.
| Y1 because overall liabilities are decreased |
3.
| Y1 because overall equity has been infused |
4.
| Leverage |
5.21.42%
6.36%
7
| Return on Investment |
8
| Return on Equity |
9.Growth rate will be same 8.69% so expected revenue will be 391284
Using the same information listed below, answer the q. 42 that follows. ...
Required information The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses...
Required information [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses $ 90,000 The company’s minimum...
The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses $ 90,000...
Required information The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses...
Required information The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses...
[The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses $ 90,000 The company’s minimum required rate...
Required information The Foundational 15 [LO10-1, LO10-2] [The following information applies to the questions displayed below.] Westerville Company reported the following results from last year’s operations: Sales $ 1,000,000 Variable expenses 300,000 Contribution margin 700,000 Fixed expenses 500,000 Net operating income $ 200,000 Average operating assets $ 625,000 At the beginning of this year, the company has a $120,000 investment opportunity with the following cost and revenue characteristics: Sales $ 200,000 Contribution margin ratio 60 % of sales Fixed expenses...
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