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In January 2007, the Status Quo Company was formed. Total assets were $547,000, of which $381,000...

In January 2007, the Status Quo Company was formed. Total assets were $547,000, of which $381,000 consisted of depreciable fixed assets. Status Quo uses straight-line depreciation of $38,100 per year, and in 2007 it estimated its fixed assets to have useful lives of 10 years. Aftertax income has been $57,000 per year for each of the last 10 years. Other assets have not changed since 2007.

a. Compute return on assets at year-end for 2007, 2009, 2012, 2014, and 2016. (Use $57,000 in the numerator for each year.) (Input your answers as a percent rounded to 2 decimal places.)
  


b. To what do you attribute the phenomenon shown in part a?
  

Increase in market share
Annual depreciation charges
Increase in current assets


c. Now assume income increased by 10 percent each year. What effect would this have on your answers to part a?
  

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Answer #1

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Home nert Page Layout Formulas Data Review View dd-Ins as Cut 11.A. A. ー E ゴText 9-ずWrap Text General Copy チFormat Painter B l U. ーータ.Δ. -=- 還便困Merge & Center. $,%,,Ma conditional Format Cell Insert Delete Format Insert Delete F mat!,Autos m37 A er笛溜Conditional Format 2 ClearFe Select Edting Clipboard Alignment Number Cells AU23 Al AJ AK AL AM AN AO AP AQ AR AS AT AU 23 24 25 26 27 28 29 30 ANS a 31 32 STATUS QUO 2012 2013 2014 2015 2016 57000 57000 57000 57000 57000 57000 57000 57000 57000 57000 508900 470800 432700 394600 356500 318400 280300 242200 204100 166000 2007 2008 2009 20102011 NET INCOME NET TOTAL ASSETS A+D RETURN ON ASSETS- 11.20% 12.11% 13.17% 14.45% 15.99% 17.90% 20.34% 23.53% 27.93% 34.34% 166000 166000 166000 166000 166000 166000 166000 166000 166000 166000 FIXED ASSETS: OPENING 381000 342900 304800 266700 228600 190500 152400 114300 76200 38100 38100 38100 38100 38100 38100 38100 3810038100 38100 38100 0 CURRENT ASSETS 34 35 36 37 38 39 40 ANS b 41 DEPRECIATION D B-CNET FIXED ASSETS 42 304800 266700 228600 190500 152400 114300 7620038100 CURRENT ASSETS IN 2007 TOTAL ASSETS FIXED ASSETS 547000 381000 166000 ANNUAL DEPRECIATION CHARGES | FIFO . CASH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratios B-S proff loss SALES BUDGETdupont DIFF ANALYSIS overheadot4 31-01-2019Home nert Page Layout Formulas Data Review View dd-Ins @ntosum.知A as Cut E AutoSum ー E ゴWrap Text Copy ey Format Painter B 1 U. ㄧ˙ タ.Δ. -=- i 便困Merge & Center. $,%, ,,oan conditional Format Cell Insert 2 ClearFe Select Edting Clipboard AU59 AH Alignment Number Cells Al AJ AK AL AN AO AP AQ AR AS AT AU 41 42 ANS c 43 010 2011 2012 2013 2014 2015 2016 57000 62700 68970 75867 83453.7 91799.1 100979 111077 122185 134403 508900 470800 432700 394600 356500 318400 280300 242200 204100 166000 2007 2008 2009 20102011 45 46 47 48 49 50 51 52 53 54 NET INCOME NET TOTAL ASSETS A+D RETURN ON ASSETS- 11.20% 13.32% 15.94% 19.23% 23.41% 28.83% 36.03% 45.86% 59.87% 80.97% 166000 166000 166000 166000 166000 166000 166000 166000 166000 166000 FIXED ASSETS: OPENING 381000 342900 304800 266700 228600 190500 152400 114300 76200 38100 38100 38100 38100 38100 38100 38100 3810038100 38100 38100 0 CURRENT ASSETS DEPRECIATION D B-CNET FIXED ASSETS 42 304800 266700 228600 190500 152400 114300 7620038100 56 57 58 59 HIGHER RETURN THAN PART a BECAUSE OF HIGHER NET INCOME AND ANNUAL DEPRECIATION CHARGES SH BUDGET budget 45 days cycle ROE, BV MV ratio VARIANCE BEP, OL FL ratos B-S proft loss SALES BUDGET dupont DIFF ANALYSIS overhead float Of | FIFO . BUDGET

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