Question

42-46. Capital intensive companies with aged facilities often have profit margins not reflecting mgher costs of replacing assets. Assume beginnine book value of $10,000, no salvage value and a ve year useful life and straight line depreciation please complete the following table and from an on perspective provide an explanation of your results. Year Income Depreciation Accumulated Depreciation ROA Net Income Begin Book Value $20,000 $20,000 $20,000 $20,000 $20,000

Answer 1

19 Begin Accumulated Nel year ancome Depreciation Income Book Depreciation Value ROA Netincome Total ASLI - 18,000 20,000 10000-0 10000 18.000 2000 ¿2000 18,000 8000 4000 19000 1-81 18000 900 -2.25 18000 20,000 2000 IO 18000 Gooo Govo 29000 2000 €3) Good 8000 18000 4000 18000 20000 2000 20 18000 (8000 2000 1ooo 2000 19000 29000 2000 2000 Noler 0 Depreciation Bookralue - salvage value = 10,000-8 life - 2000 & Return on Aesch = Net Income Total Assers/ Ang Assels ROA gives the the investors and creditors an overview of for earnings from the management efficieny Scanne danith assers CamScanner

The higher the Ron e management more and more The higher it is better at describes ability and capable of generating profits from the available assess Here we assumed that since no other ceset cette goven we took total assets, other worse, we can solve the same problem by considering average Net Assets formula . Scanned with CamScanner