ZuoTi.Pro
Question

Sales Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income Less: Interest expense Earnings before taxes Less: Taxes (35%) Net income 4,500,000 (3,500,000) 1,000,000 (500,000) $500,000 (100,000) $400,000 (140,000) $260,000Current assets Net fixed assets Total Assets $500,000 Liabilities ,500,000 Owners equity $1,000,000 1,000,000 $2,000,000 $2,000,000 Total

business   accounting   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1
a.
Total Asset Turnover = Sales
Total Assets
                                      = $4,500,000
$2,000,000
                                      = 2.25 times
Operating Profit Margin = Operating Income
Sales
                                             = $500,000
$4,500,000
                                              = 11.11%
Operating Return on Assets   = Operating Income
Total Assets
                                                    = $500,000
$2,000,000
                                                    = 25%
                                         Or       = Operating Income     x      Sales
                      Sales                       Total Assets        
                                                    =        .1111 x 2.25 = 25%
b.
Operating return on assets    = Operating Income    x     Sales
            Sales                    Total Assets      
                                                     = .13        x          $4,500,000
$3,000,000
                                                     = .13   x    1.5 = 19.5%
c.
Post-Renovation Analysis:
Return on common equity   = Net income available to common
Common equity
                                                  = $217,500
$1,000,000 + $500,000
                                                  = 14.50%
Net income available to common following the renovation:
Operating Income (.13 x $4.5m) $585,000
   Less: Interest ($100,000 + $50,000) -150,000
Earnings before taxes 435,000
   Less: Taxes (50%) -217,500
Net Income available to common $217,500
Pre-renovation Analysis:   
Return on common equity= $200,000 / $1,000,000 = 20%
Comparative Analysis:
A comparison of the two rates of return would argue that the renovations not happen. However, since investments in fixed assets generally produce cash flows over the years, it is not appropriate for base decisions about their acquisition to a single year’s ratios.  
0 0
Add a comment
Know the answer?
Add Answer to:
Sales Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income Less: Interest...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Sales $7000 3000 Less: Cost of goods sold Gross Profit Less: Operating expenses Selling expenses General...

    Sales $7000 3000 Less: Cost of goods sold Gross Profit Less: Operating expenses Selling expenses General and administrative expenses Lease expenses Depreciation expenses Total operating expenses Operating profits Less: Interest expenses Net profit before taxes Less: Taxes (30%) Net profit after taxes Less: Preferred stock dividends Earnings available for common stockholders Less: Common stock dividends Retained earnings 2220 200 2020 500 2013 2012 2013 Assets Current Assets Cash Account Receivable Inventory Total current assets 980 800 500 2280 2200 Liabilities...

  • 0 Income statement 2016 2015 Sales revenues Less: Cost of goods sold Gross profit Less: Operating...

    0 Income statement 2016 2015 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes (amounts in thousands) 2017 211,400 $ 182,910 105,000 96,000 106,400 $ 86,910 53,000 46,000 53.400 $ 40,910 5.385 6,459 48,015 $ 34,451 22.617 16. 160 Print Done i Income statement JJUJ 0,435 LESS. Merest expense Income before income taxes 48,015 $ 22,647 25,368 $ 34,451 16,160 Less: Income tax expense Net income 18,291 Additional...

  • 2015 2016 182,910 96,000 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses...

    2015 2016 182,910 96,000 Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income 2017 211,400 $ 105,000 106,400 $ 53,000 53,400 $ 5,385 48,015 $ 22.647 25,368 $ 86,910 46,000 40,910 Less: Interest expense 6,459 Income before income taxes 34,451 16,160 Less: Income tax expense Net income 18,291 Print Done i Income statement UJOJ 0,15 LESS. IMETEST Experise Income before income taxes 48,015 $ 22,647 34,451 16,160 Less: Income tax expense 25,368 $ 18,291 Net...

  • 2009 Income Statement Net Sales Less: Cost of Goods Sold Less: Depreciation Earnings Before Interest and...

    2009 Income Statement Net Sales Less: Cost of Goods Sold Less: Depreciation Earnings Before Interest and Taxes Less: Interest Paid Taxable income Less: Taxes Net Income Dividends Additions to retained earnings 2009 Balance Sheet Cash $3,160 Accounts Payable Accounts rec 4,160 Long-term debt Inventory 6,480 Common stock Total $13,800 Retained earnings Net fixed assets 29.400 Total assets $43,200 Total liabilities & equity $38,900 31,400 2,600 4,900 1,800 $3,100 1,150 $1,950 $390 $1,560 $8,120 21,200 7,500 6,380 543,200 HLM, Ine. is...

  • Income Statement Sales revenue $50 Cost of goods sold 30 Gross profit (gross margin) 20 Selling...

    Income Statement Sales revenue $50 Cost of goods sold 30 Gross profit (gross margin) 20 Selling and administrative expenses 10 Income before taxes A Income tax expense 4 Net Income $6 Earnings per share E Balance Sheet Cash $2 Liabilities: Inventory 5 Accounts payable $1 Current assets B Equipment, at cost 10 Shareholders’ Equity: Less: accumulated depreciation C Common stock, $1 par value per share 10 Equipment, net of depreciation 6 D Total assets $13 Total liabilities and s/equity $13...

  • ($ thousands) Sales Cost of goods sold Gross profit Operating expenses Net income HAROUN COMPANY Comparative...

    ($ thousands) Sales Cost of goods sold Gross profit Operating expenses Net income HAROUN COMPANY Comparative Income Statements For Years Ended December 31, 2019-2013 2019 2018 2017 2016 2015 2014 2013 $1,536 $1,345 $1,224 $1,122 $1,047 $ 974 $ 798 1,104 898 772 676 628 587 468 432 447 452 446419 387 330 329 258 236 174 151 149 124 $ 103 $ 189 $ 216 $ 272 $ 268 $ 238 $ 206 HAROUN COMPANY Comparative Balance Sheets December...

  • Sales Revenue $ 200,000 Cost of Goods Sold 106,000 Gross Profit 94,000 Less: Operating Expenses Selling...

    Sales Revenue $ 200,000 Cost of Goods Sold 106,000 Gross Profit 94,000 Less: Operating Expenses Selling expense 16,000 General and administrative expense 10,000 Lease expense 1,000 Depreciation expense 10,000 Total Operating Expenses 37,000 Operating Profits 57,000 Interest Expense 6,100 Net Profit before Taxes 50,900 Less: Taxes 4,360 Net Profit After Taxes 46,540 Q. Find the operating cash flow. Please show work on how to get the answers because It will still be wrong without the work shown. Thank you.

  • (Financial Ratios-Investment Analysis) The annual sales for Salco, Inc., were $5,000,000 last year. The firm's end-of-year...

    (Financial Ratios-Investment Analysis) The annual sales for Salco, Inc., were $5,000,000 last year. The firm's end-of-year balance sheet appeared as follows: Current assets $500,000 Net fixed assets $1,500,000 $2,000,000 Liabilities $1,000,000 common' equity $1,000,000 $2,000,000 The firm's income statement for the year was as follows: Sales Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Earnings before taxes Less: Taxes (40%) Net income $5.000.000 (3,000,000) $2,000,000 (1,500,000) $500,000 (100,000 $400,000 (160.000) $240.000 a. Calculate...

  • ($ thousands) Sales Cost of goods sold Gross profit Operating expenses Net income HAROUN COMPANY Comparative...

    ($ thousands) Sales Cost of goods sold Gross profit Operating expenses Net income HAROUN COMPANY Comparative Income Statements For Years Ended December 31, 2019-2013 2019 2018 2017 2016 2015 2014 2013 $1,536 $1,345 $1,224 $1,122 $1,047 $ 974 $ 798 1. 104 628 587 468 387 330 258 236 151 149 124 $ 216 $ 272 268 $ 238 $ 206 HAROUN COMPANY Comparative Balance Sheets December 31, 2019-2013 2019 2018 2017 2016 2015 2014 2013 $ 96 693 2,508...

  • Company A 100% 23% Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses...

    Company A 100% 23% Sales revenues Less: Cost of goods sold Gross profit Less: Operating expenses Operating income Less: Interest expense Income before income taxes Less: Income tax expense Net income 77% 16% 61% Company B 100% 21% 79% 24% 55% 4% 51% 4% 47% 3% 58% 3% 55% Which company is more profitable based on this common - size statement? O A. Company B OB. Company A OC. Company A and B are equally profitable OD. Cannot determine from...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT