Given,
Calculation of sales:
average accounts receivable turnover = 365/ accounts receivable turnover ratio
25 = 365/ accounts receivable turnover ratio
accounts receivable turnover ratio = 365/ 25 = 14.6
accounts receivable turnover ratio = net credit sales/ average accounts receivable
14.6 = net credit sales/ $4.54 million
net credit sales = 14.6 * $4.54 million = $66.284 million
Therefore sales = $66.284 million
Calculation of Profit margin:
Profit margin = net income/ sales
= $4.80 million/ $66.284 million = 0.072415 = 7.24%
Profit margin = 7.24%
Calculation of total debt and total equity:
Debt to equity ratio = total debt/ total equity
1.2 = total debt/ total equity
1.2 = total debt/ (total assets - total debt)
1.2 (total assets - total debt) = total debt
1.2 ($33.4 million - total debt) = total debt
$40.08 million - 1.2 total debt = total debt
$40.08 million = total debt + 1.2 total debt =2.2 total debt
2.2 total debt = $40.08 million
total debt = $40.08 million/ 2.2 =$18.2181 million
total debt =$18.2 million
Therefore, total equity = total assets - total debt = $33.4 million - $18.2 million = $15.2 million
total equity = $15.2 million
Change in sales because of change in ACP:
Sales = $66.284 million
increase in sales = 5%
New sales = $66.284 million * 105% = $69.5982 million = $69.6 million
New profit = new sales * profit margin = = $69.6 million * 7.24% = $5.039 million = $5.04 million
average accounts receivable turnover = 365/ accounts receivable turnover ratio
30= 365/ accounts receivable turnover ratio
accounts receivable turnover ratio = 365/ 30 = 12.166
accounts receivable turnover ratio = new credit sales/ new average accounts receivable
12.166 = $69.6 million/ new average accounts receivable
new average accounts receivable= $69.6 million/ 12.166
new average accounts receivable = $5.72 million
Change in average accounts receivable = new average accounts receivable - old average accounts receivable
= $5.72 million - $4.54 million = $1.18 million
New debt = old debt + Change in average accounts receivable = $18.2 million + $1.18 million = $19.38 million
Calculations:
New net income = $5.04 million
New total assets turnover = new sales/ average total assets = $69.6 million/ $33.4 million = 2.083
Equity multiplier = total assets/ total equity = $33.4 million/ $15.2 million = 2.1973
Return on assets = net income/ total assets = $5.04 million/ $33.4 million = 0.15089 = 15.089%
Return on equity = net income/ total equity = $5.04 million/ $15.2 million = 0.33157 = 33.157%
Please post answers and indicate: Net income, total asset turnover, equity multiplier, ROA, and ROE You...
Please answer in the empty box You are considering investing in Dakota's Security Services. You have been able to locate the following information on the firm: Total assets are $33.4 million, accounts receivable are $4.54 million, ACP is 25 days, net income is $4.80 million, and debt-to-equity is 12 times. All sales are on credit. Dakota's is considering loosening its credit policy such that ACP will increase to 30 days. The change is expected to increase credit sales by 5...
Which of the follow affects ROE? a. Net Profit Margin b. Total Asset Turnover c. Equity Multiplier (leverage) d. A, B and C e. A and B
For fiscal year 2017, Costco Wholesale Corporation (COST) had a net profit margin of 2.08%, asset turnover of 3.55, and a book equity multiplier of 3.37. In the same fiscal year, Walmart Inc. had a ROE of 30.05%, a ROA of 15.20%, and a book value of equity of $1.8 Billion. a) Use this data to compute Costco's ROE using the DuPont Identity. [1 point] b) What is Walmart's book value of assets? What is Walmart's book debt-to-equity ratio? (assume...
Calculate the Following Ratios Net Interest Margin Profit Margin ROE ROA Spread Ratio Asset Utilization Ratio Equity Multiplier Provision for loan loss ratio Boca State Bank Income Statement Month Ending July 31, 2020 Boca State Bank Balance Sheet July 31, 2020 Income Amount($) $9,000 $4,000 Interest on fees and loans Interest on investment securities interest on reverse repos interest on deposits in other banks Total Income Assets Cash and due from banks Investment securities Reverse Repos Loans Fixed asset other...
Please help. Compute, Disaggregate and Interpret ROE and ROA Selected balance sheet and income statement information from Staples, Inc., follows ($ millions). Sales Interest expense Net income Total Assets Stockholders' Equity 2014 2014 2014 2014 2013 2014 2013 $22,492 $49 $135 $10,314 $11,175 $5,313 $6,141 a. Compute the 2014 return on equity (ROE), return on assets (ROA), and return on financial leverage (ROFL). Round answers to one decimal place (i.e., 0.2568 = 25.7%). Do not round until your final answer....
2.5 Stephanie, Inc. has a profit margin of 9 percent, total asset turnover of 1.5, and ROE of 17.20 percent. What is this firm's debt-equity ratio? 2.6 For the past year, David, Inc. had a cost of goods sold of $18,364. At the end of the year, the accounts payable balance was $4,205. a. (6 points) How long on average did it take the company to payoff its suppliers during the year? b. (4 points) What might a large value...
value 0.00 polints You are considering investing in Annie's Eatery. You have been able to locate the following information on the firm: Total assets are $35.3 million, accounts receivable are 58.05 millian, ACP is 30 days, net income is 54 million, debt-to-equity is 1.8 times, and dividend payout ratio is 45 percent All sales are on credit. Annie's is considering I expected oosening its credit policy such that ACP will increase to 35 days. The change is to increase credit...
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $345,000 ROA 8% Interest expense $134,550 Accounts payable and accruals $1,050,000 Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round...
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income ROA Interest expense Accounts payable and accruals $1,050,000 Broward's tax rate is 35%. Broward finances with only debt and common equity, so it has no preferred stock, 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round your answers to...
BEP, ROE, AND ROIC Broward Manufacturing recently reported the following information: Net income $215,000 ROA 9% Interest expense $73,100 Accounts payable and accruals $1,000,000 Broward's tax rate is 30%. Broward finances with only debt and common equity, so it has no preferred stock. 40% of its total invested capital is debt, while 60% of its total invested capital is common equity. Calculate its basic earning power (BEP), its return on equity (ROE), and its return on invested capital (ROIC). Round...