Question

Jane Doe is a private company which a management accountant is analyzing its performance. So it is trying to look at different components that are distributing to its success. The tests he wants to carry out are the following using the table below: Current liabilities 4500 Notes payable 25600 Equity 150000 Personal car 15000 Tax rate 30% Net income 19500 Sales 56200 Interest on debt 8% Canada bond rate TSX index Jan 14850 TSX index Dec 15200 Beta 1.5 Cost of training workers 23000 Research and Development 98000 Current assets $54000 2% REQUIRED 1. Calculate interest expense, tax and EBIT 2. Calculate the operating assets of the company. 3. Calculate ROI and Residual Income 4. What are the major criticisms directed towards the use of Return on Investment. 5. Calculate EVA?

Answer 1

Net Jacome L Earning aftr Ioterat & tax 19500 E BIT 29905 Aoterat Experuc 2048 Soterest (sy.) 20 48 27857 EBT Tax 8357 354 Tax (30%) 29905 EBIT 19500 opera heg Assets Carveot Assih cNTEat rabilihes 49 500 Reture Income Inverterent (9500 Net Socome 50000 Equity 9ive the clear rient G) The care of Single rahioe (RO3) an not status of the buinen Gike EBIT EAT, so phich is forms af go come The many considered to get valid Ro J are to to select tverteneot oith high rate Igflucacs the Company Reture Ctapitul Snrcsked x tWAcc) Net opesating proht After tax alACca Risk free Rate Retun 19.500 xBeta 21750 19500- C2250)