A firm with manufacturing facilities s is currently running at 40% capacity. Its B/S is summarizedas follows (in millions of dollars
A firm with manufacturing facilities is currently running at 40% capacity. Its B/S is summarized as follows (in millions of dollars):
A/R 2.0
Inventory 8.0
Plant assets 22.0
Financial liabilities 8.0
Common equity 24.0
The firm is generating sales of $64.0 million from its current production, earning an after-tax operating profit margin of 7.5%. [NOPAT/Sales = 7.5%]
Required:
a. Calculate the firm’s return on net operating assets, RNOA = NOPAT/NOA, it’s A/R turnover, its INV turnover = Sales/Inventory, its turnover on plant assets = Sales/Plant assets, its total assets turnover = Sales/Total assets. (6 marks)
b. The firm has a required rate of return of 10% for its operations [WACC = 10%]. Value the firm (its core operations) using the formula:
Value of the firm = NOA + 
where NOA its net operating assets.
(4 marks)
c.
Suppose the firm were to sell at 80% capacity of its plant with no change in selling prices or profit margins (and so earned revenues of $64*2=$128 million). A/R and Inventory would increase to maintain the same A/R and Inventory turnovers as before. Calculate the value of the firm. (6 marks) Identify the aspects of the operations that have increased the value of the firm over that calculated in (b). (3 marks)
d.
Repeat the calculations in (c.) if the firm were to sell products at 100%. (6 marks)
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A firm with manufacturing facilities s is currently running at 40% capacity. Its B/S is summarizedas follows (in millions of dollars
Firm with Manufacturing facilities
A firm with manufacturing facilities is currently running at 40% capacity. Its B/S is summarizedas follows (in millions of dollars):A/R 2.0Inventory 8.0Plant assets 22.0Financial liabilities 8.0Common equity 24.0The firm is generating sales of $64.0 million from its current production, earning an after-taxoperating profit margin of 7.5%. [NOPAT/Sales = 7.5%]Required:a.Calculate the firm’s return on net operating assets, RNOA = NOPAT/NOA, it’s A/Rturnover, its INV turnover = Sales/Inventory, its turnover...
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(a) Compute net operating profit after tax (NOPAT) for 2018. Assume that the combined federal and...
(a) Compute net operating profit after tax (NOPAT) for 2018.
Assume that the combined federal and state statutory tax rate is
22%. (Round your answer to the nearest whole number.)
2018 NOPAT =Answer
($ millions)
(b) Compute net operating assets (NOA) for 2018 and 2017.
2018 NOA =Answer
($ millions)
2017 NOA =Answer
($ millions)
(c) Compute and disaggregate 3M’s RNOA into net operating profit
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Demonstrate that RNOA = NOPM...
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please help with correct answer. i need help urgently Analysis and Interpretation of Profitability Balance sheets...
please help with correct answer. i need help urgently
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(a) Compute net operating profit after tax (NOPAT) for 2018.
Assume that the combined federal and state statutory tax rate is
22%. (Round your answer to the nearest whole number.)
2018 NOPAT =Answer
($ millions)
(b) Compute net operating assets (NOA) for 2018 and 2017.
2018 NOA =Answer
($ millions)
2017 NOA =Answer
($ millions)
(c) Compute and disaggregate 3M’s RNOA into net operating profit
margin (NOPM) and net operating asset turnover (NOAT) for 2018.
Demonstrate that RNOA = NOPM...
please help with correct answer. i need help urgently
Analysis and Interpretation of Profitability Balance sheets and income statements for 3M Company follow. 3M COMPANY Consolidated Statements of Income For Years ended December 31 ($ millions) 2015 2014 2013 Net sales $30,274 $31,821 $30,871 Operating expenses Cost of sales 15,383 16,447 16,106 Selling, general and administrative expenses 6,182 6,469 6,384 Research, development and related expenses 1,763 1,770 1,715 Total operating expenses 23,328 24,686 24,205 Operating income 6,946 7135 6,666 Interest...
Balance sheets and income statements for 3M Company follow. Consolidated Statements of Income Years ended December 31 ($ millions) 2009 2008 2007 Net sales $23,123 $25,269 $24.462 Operating expenses Cost of sales 12.109 13.379 12,735 Selling. general and administrative expenses 4,907 5,245 5.015 Research, development and related expenses 1,293 1,404 1,368 Loss/(gain) from sale of business 23 (849) Total operating expenses 18.309 20,051 18.269 Operating income 4.814 5.218 6.193 Interest expenses and income Interest expense 219 215 210 Interest income...
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