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DeVry Chicago ACCT 346 Week 7 Problems

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CLASS: problem #1: (For help, see pg 446-447);A) Assume WAX Inc has net income $7,000,000, interest expense of $1,500,000 and a tax rate of 40%. Calculate the NOPAT.;b)If this (same) company had sales of $10,000,000 what is the company's profit margin?;C) What do these amounts tell us?;Class: Problem #2;Sam Co. specializes in selling shavers.;In the most recent year, the company had net operating income of;$6,000,000 on sales of $90,000,000. The company's average operating assets for the year were $30,000,000 and its minimum rate of return is 18%.;Ignore the impact of income taxes in your calculation.;Compute the company's residual income for the year.;(A little help on Problem #2;Residual Income is the income we have in excess of our minimum desired. Just calculate the desired income --in this case it is at 18%-- and any amount over that is "residual".);Problem #3;Current Assets:.....................year 1........year 2;Cash and marketable securities 160,000..150,000;Accounts receivable, net.......175,000... 170,000;Inventory..........................140,000...150,000;Total current assets............475,000......470,000;Current Liabilities;Accounts payable................150,000....140,000;Accrued liabilities................50,000.......60,000;Notes payable, short term......140,000.....140,000;Total current liabilities...........340,000......340,000;Sales..........................$5,500,000;Cost of goods sold.........$2,750,000;Required: Calculate the Inventory Turnover ratio.;What does this ratio tell management?;Class: problem #1;The Lance Company, provides various services.;Financial information concerning the most recent;year appears below;Sales $12,000,000;Net operating income $3,300,000;Average operating assets $30,000,000;Ignore the impact of income taxes in your calculation.;Compute the return on investment (ROI) for the company;Class: Problem #2 (similar to #1);The Young Co., provides various services.;Financial information concerning the most recent;year (not a successful year) appears below;Sales $80,000,000;Net operating income $500,000;Average operating assets $100,000,000;Ignore the impact of income taxes in your calculation.;a) Compute the return on investment (ROI) for the company.;b) Discuss what you think about their year;CLASS: 3rd Problem;Using the Statements on Page 541 and 542 for Great Oaks Furniture, Let's discuss the following ratios for 2012;a) Return on Assets;b) Quick ratio;c) Current ratio;d) Debt to equity ratio

 

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