Calculate the company's return on equity as a percentage. (0.5 points) 60% b. A company makes a net profit before tax of $5,000 and has total assets with a value of $10,000. Calculate the company's return on assets as a percentage. (0.5 points) 50% c. A company has $1,400 in liabilities and $1,500 in assets.
$15,300C.$18,700D $23,700E. $35,500 | 3 | b | Kaylor Equipment Rental paid $75 in dividends and $511 in interest expense. The addition to retained earnings is $418 and net new equity is $500. The tax rate is 35 percent. Sales are $15,900 and depreciation is $680.
Old press – Originally purchased 3 years ago at an installed cost of $400,000, it is being depreciated under MACRS using a 5-year recovery period. The old press has a remaining economic life of 5 years. It can be sold today to net $420,000 before taxes; if it is retained, it can be sold to net $150,000 before taxes at the end of 5 years. Press A – This highly automated press can be purchased for $830,000 and will require $40,000 in installation costs. It will be depreciated under MACRS using a 5-year recovery period.
$1,500,000/$12,000,000 = 0.125 or 12.5% Each dollar of revenue produces 12.5% of net income or profit. Cash flow= cash generated during the year The rough estimation of cash flow = net income + non -cash expenses, in this case, $1,500,000 + $1,500,000 = 3,000,000 C. Now, suppose the company changed its depreciation calculation procedures (still within GAAP) such that its depreciation expense doubled. How would this change affect Brandywine’s net income, total profit margin, and cash flow? Brandywine Homecare Income statement with double depreciation expense: Month ending December 31, 2007 Revenue $12,000,000 Total revenue $12,000,000 Expenses: Depreciation $ 1,500,000x2= 3,000,000 Other 12,000,000 x 75/100 = 9,000,000 Total expenses= Depreciation + Other expenses= 1,500,000x2+ 9,000,000= $12,000,000 Total revenue – total expenses = Net income or Profit - 12,000,000- 12,000,000= 0 What
– 133 2013 net sales / base year 2011 net sales = 800,000 / 600,000 = 1.33 1.33 x 100% = 133% 5. In analyzing financial statements, horizontal analysis is a- tool 6. Comparative balance sheets - are usually prepared for at least two years 7. Assume the following cost of goods sold data for a company: 2013 $1,500,000 2012 1,200,000 2011 1,000,000 If 2011 is the base year, what is the percentage increase in cost of goods sold from 2011 to 2013? – 50% = New - Old Old 100 8.
If the appliances are expected to last for 10 years, and you earn 5 percent on your savings, what would be the future value of the amount you would pay for the service contract? 4. You estimate that you can save $3,800 by selling your own home rather than using a real estate agent. What would be the future value of that amount if invested for five years at 7 percent? 5.
Budgeting, forecasting, and diversifying are the main common measures companies take to increase market shares. The Profit and Loss Statement shown on the Excel Workbook of XYZ Company Inc. by the end provides total accounting for the loss. It has been designed based and considering all selling and purchasing activity that has happened in each particular year for XYZ. Generally the Financial Department should be responsible of accounting the loss and profit of the company for each fiscal year. By increasing the sales by the percentage demonstrated in the workbook, you can see how much this influences the numbers for the next five years.
Eisenhower communications is trying to estimate the first-year net operating cash flow (at year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenue $10 million Operating costs (excluding depreciation) $ 7 million Depreciation $ 2 million Interest expense $ 2 million The company has a 40 percent tax rate, and its WACC is 10 percent a. What is the project’s operating cash flow for the first year? b. If this project would cannibalize other projects by $1 million of cash flow before taxes per year.
c. Internal common equity where the current market price of the common stock is $43.50. The expected dividend this coming year should be $3.25, increasing thereafter at a 7% annual growth rate. The corporation’s tax rate is 34%. d. A preferred stock paying a 10% dividend on a $125 par value. If a new issue is offered, flotation costs will be 12% of the current price of $150.
Ignoring taxes, the correct opportunity cost for this machine in capital budgeting decisions is: A. $75,000 B. $25,000 C. $20,000 D. $5,000 4. What is the amount of the operating cash flow for a firm with $500,000 profit before tax, $100,000 depreciation expense, and a 35% marginal tax rate? A.