In January 2007. the Status Quo Company was formed Total assets were $556 000, of which...

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In January 2007. the Status Quo Company was formed Total assets were $556 000, of which $385.000 consisted of depreciable fix

b. To what do you attribute the phenomenon shown in part a? Annual depreciation charges Increase in market share Increase in

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Answer 1

Answer #1

a]

Return on assets = after tax income / net fixed assets

net fixed assets each year = average of beginning and ending fixed assets during the year

F E Aftertax income A B C D Assets at Assets at beginning Depreciation end 2007 $385,000 $38,500 $346,500 2008 $346,500 $38,5

A C Ε F 1 Assets at beginning 385000 -D2 =D3 =D4 2 2007 3 2008 4 2009 5 2010 6 2011 7 2012 8 2013 9 2014 10 2015 11 2016 Depr

b]

The increasing ROA is due the decreasing net fixed assets. The net fixed assets are decreasing due to depreciation charges

c]

A B C D Assets at Assets at beginning Depreciation end 2007 $385,000 $38,500 $346,500 2008 $346,500 $38,500 $308,000 $308,000

B D Assets at beginning 385000 =D2 =D3 =D4 =D5 2 2007 3 2008 4 2009 5 2010 6 2011 7 2012 8 2013 9 2014 10 2015 11 2016 Deprec

THe ROA has increased compared to answers in part (A)

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Answer 2

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In January 2007. the Status Quo Company was formed Total assets were $556 000, of which...

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