Question
In: Finance
The annual sales for Salco, Inc. were $4.46 million last year. The firm's end-of-year balance sheet...
The annual sales for Salco, Inc. were
$4.46
million last year. The firm's end-of-year balance sheet was as follows:
. Salco's income statement for the year was as follows:
.
a. Calculate Salco's total asset turnover, operating profit margin, and operating return on assets.
b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of
$1.04
million. The firm will maintain its present debt ratio of 50
percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to
13.4
percent. What will be the new operating return on assets ratio (i.e., net operating
income divided by÷total
assets) for Salco after the plant's renovation?
c. Given that the plant renovation in part
(b)
occurs and Salco's interest expense r $49,000
per year, what will be the return earned on the common stockholders' investment? Compare this rate of return with that earned before the renovation. Based on this comparison, did the renovation have a favorable effect on the profitability of the firm?
Current assets $507,000
Liabilities
$1,005,500
Net fixed assets
1,504,000
Owners' equity
1,005,500
Total Assets
$2,011,000
Sales
$4,460,000
Less: Cost of goods sold
(3,495,000)
Gross profit $965,000
Less: Operating expenses
(497,000)
Net operating income
$468,000
Less: Interest expense
(104,000)
Earnings before taxes
$364,000
Less: Taxes
(35%)
(127,400)
Net income
$236,600
Solutions
jeff jeffy answered 7 months agoRelated Solutions
The annual sales for Salco, Inc. were $4.67 million last year. The firm's end-of-year balance sheet...
The annual sales for Salco, Inc. were $4.67 million last
year.
The firm's end-of-year balance sheet was as follows:
Current assets $501,000
Liabilities $1,004,500
Net fixed assets 1,508,000 Owners'
equity 1,004,500
Total Assets $2,009,000 Total
$2,009,000
. Salco's income statement for the year was as follows:
Sales $4,670,000
Less: Cost of goods sold (3,498,000)
Gross profit $1,172,000
Less: Operating expenses (497,000)
Net operating income $675,000
Less: Interest expense (98,000)
Earnings before taxes ...
The annual sales for Salco, Inc. were $4.57 million last year. The firm's end-of-year balance sheet...
The annual sales for Salco, Inc. were $4.57 million last year.
The firm's end-of-year balance sheet was as follows:
Current assets
$509,000
Liabilities
$997,000
Net fixed assets
1,485,000
Owners' equity
997,000
Total Assets
$1,994,000
Total
$1,994,000
Salco's income statement for the year was as follows:
Sales
$4,570,000
Less: Cost of goods sold
(3,492,000)
Gross profit
$1,078,000
Less: Operating expenses
\(503,000)
Net operating income
$575,000
Less: Interest expense
(97,000)
Earnings before taxes
$478,000
Less: Taxes
(35%)
(167,300)
Net income
$310,700
a....
The annual sales for Salco, Inc. were $4.52 million last year. The firm's end-of-year balance sheet was as follows:
(Financial statement analysis) The annual sales for Salco,
Inc. were $4.52 million last year. The firm's end-of-year balance
sheet was as follows:Current assets $503,000 Liabilities $994,000Net Fixed Assets 1,485,000 Owners Equity 994,000Total Assets: $1,988,000 Total : $1,988,000Salco's income statement for the year was as follows:Sales $4,520,000Less: Cost of goods sold (3,503,000)Gross profit $1,017,000Less: Operating expenses (505,000)Net operating income $512,000Less: Interest expense (97,000)Earnings before taxes $415,000Less: Taxes (35%) (145,250)Net income $269,750Please Answer The Following:A: Calculate Salco's total asset turnover, operating profit...
The annual sales for Salco, Inc. were $ 4.55 million last year. The firm's end-of-year balance...
The annual sales for Salco, Inc. were $ 4.55 million last year.
The firm's end-of-year balance sheet was as follows: Current
assets $499,000 Liabilities $1,001,500 Net fixed assets 1504000
Owners' equity 1001500 Total Assets $2,003,000 Total $2,003,000
LOADING.... Salco's income statement for the year was as
follows: Sales $4,550,000 Less: Cost of goods sold (3,506,000)
Gross profit $1,044,000 Less: Operating expenses (495,000) Net
operating income $549,000 Less: Interest expense (101,000) Earnings
before taxes $448,000 Less: Taxes (35%) (156,800) Net...
(Financial statement analysis) The annual sales for Salco, Inc. were$4.64million last year. The firm's end-of-year balance...
(Financial statement analysis) The annual sales for Salco,
Inc. were$4.64million last year. The firm's end-of-year balance
sheet was as follows Salco's income statement for the year was as
follows:
a. Calculate Salco's total asset turnover, operating profit
margin, and operating return on assets.
b. Salco plans to renovate one of its plants and the renovation
will require an added investment in plant and equipment of
$1.01 million. The firm will maintain its present debt ratio of
50 percent when financing...
(Financial statement analysis) The annual sales for Salco, Inc. were $ 4.39 million last year. The...
(Financial statement analysis) The annual sales for Salco,
Inc. were $ 4.39 million last year. The firm's end-of-year balance
sheet was as follows: Salco's income statement for the year was
as follows:
b. Salco plans to renovate one of its plants and the renovation
will require an added investment in plant and equipment of $ 1.03
million. The firm will maintain its present debt ratio of 50
percent when financing the new investment and expects sales to
remain constant. The...
(Financial statement analysis) The annual sales for Salco, Inc. were $ 4.47 million last year. The...
(Financial statement analysis) The annual sales for Salco,
Inc. were $ 4.47 million last year. The firm's end-of-year balance
sheet was as follows: LOADING.... Salco's income statement for
the year was as follows: LOADING.... a. Calculate Salco's total
asset turnover, operating profit margin, and operating return on
assets. b. Salco plans to renovate one of its plants and the
renovation will require an added investment in plant and equipment
of $ 1.04 million. The firm will maintain its present...
(Financial statement analysis) The annual sales for Salco, Inc. were $4.58 million last year. Current assets...
(Financial statement analysis) The annual
sales for Salco, Inc. were $4.58 million last year.
Current assets
$505,000
Liabilities
$1,009000
Net fixed assets
1,513,000
Owners' equity
$1,009,000
Total Assets
$2,018,000
Total
$2,018,000
Salco's income statement for the year was as
follows
Sales
$4,580,000
Less: Cost of goods sold
(3,507,000)
Gross profit
$1,073,000
Less: Operating expenses
(492,000)
Net operating income
$581,000
Less: Interest expense
(109,000)
Earnings before taxes
$472,000
Less: Taxes
(35 %35%)
(165,200)
Net income
$306,800
Please Show Work....
(Evaluating current and pro forma profitability) The annual sales for Salco Inc. were $4.50 million last...
(Evaluating
current and pro forma
profitability)
The annual sales for Salco Inc. were
$4.50
million last year. All sales are on credit. The firm's
end-of-year balance sheet and income statement were in the popup
window:
LOADING...
.
a. Calculate Salco's total asset turnover, operating profit
margin, and operating return on assets.
b. Salco plans to renovate one of its plants, which will
require an added investment in plant and equipment of
$1.00
million. The firm will maintain its present debt...
The Robbins Corporation is an oil wholesaler. The firm's sales last year were $1.01 million, with...
The Robbins Corporation is an oil wholesaler. The firm's sales
last year were $1.01 million, with the cost of goods sold equal to
$620,000. The firm paid interest of $179,000 and its cash operating
expenses were $102,000. Also, the firm received $40,000 in
dividend income from a firm in which the firm owned 22% of the
shares, while paying only $11,000 in dividends to its stockholders.
Depreciation expense was $50,000. Use the corporate tax rates shown
in the popup window...
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