Question

In: Finance

a. 2016 2015 Income from operations $         20,182.00 $ 18,161.00 Provision for income taxes $            2,953.00...

a. 2016 2015
Income from operations $         20,182.00 $ 18,161.00
Provision for income taxes $            2,953.00 $    6,314.00
Other Income (expense) $             (431.00) $       346.00
a. NOPAT 2016 2015
20182-(2953+(431*.37)) $17,069.53
18161-(6314+(-346*0.37)) $ 11,975.02
b. 2016 2015
OPERATING ASSETS $         80,454.00 $ 77,946.00
OPERATING LIABILITIES $         61,569.00 $ 57,002.00
b. NOA 2016 2015
$         18,885.00 $ 20,944.00
c. 2016 2015
NOPAT $17,069.53 $ 11,975.02
Average NOA              19,914.50      23,832.00
RNOA 85.71% 50.25%
d. 2016 2015
Net Income $         16,798.00 $ 12,193.00
Average Stockholders' Equity $         76,040.00 $ 84,933.50
ROE 22.09% 14.36%

A. How do you interpret Net Opearting Profit after Tax for 2016 and 2015? What is the performance on the calculations based on your analysis?

B. How do you interpret Net Opearting Assets for 2016 and 2015? What is the performance on the calculations based on your analysis?

C. How do you interpret Retun on Net Operating Assets for 2016 and 2015? What is the performance on the calculations based on your analysis?

D. How do you interpret Return on Equity for 2016 and 2015? What is the performance on the calculations based on your analysis?

Solutions

Expert Solution

a) Net operating profit after tax is similar to EBIT adjusted for taxes.

Now as we can see that income from operations and consequently NOPAT is increasing from 2015 to 2016. This means that company has become more operationally efficient. Also, the company may have changed the capital strucuture to its advantage as even after a considerable increase in operating income, it has reduced the tax liability to less than half. Therefore company is going strong.

b)

Operating assets an well as liabilities have increased a little. NOw NOPAT has increased a lot as compared to increase in operation assetes. This means that assets are being utilized properly and more efficiently.

c) Return on net operating assets=Net Income / Average of the Operating Assets
This percentage has increased considerably from 50.25% to 85.71% following our analysis of previous two parts of increased efficiency from assets.

d) ROE= Net Income/ Shareholder's equity.

Return on equity is the income to equity holders from their investment. It has increased from 14.36% to 22.09%. This is a considerable increase to equity holders. This results mostly from increase in Net Income. This means that net income has increase much more given per unit equity.

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $276,000 2016 316,000...
Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $276,000 2016 316,000 2017 370,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $114,000. The equipment is expected to last three years and have a(n) $9,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $66,000 in 2015, $26,000 in 2016, and $13,000 in 2017. Wyhowski's tax...
The Home Depot reported earnings from continuing operations before the provision for income taxes of $6,068...
The Home Depot reported earnings from continuing operations before the provision for income taxes of $6,068 million for the year ending January 29, 2012, in its 10-K. Footnote 6 revealed that the provision for income taxes was $2,185 million and that the current amount paid to the federal, state, and foreign governments was $1,950 million. 1. Compute the earnings from continuing operations after taxes. 2. Prepare the journal entry to record taxes on ordinary activities. Omit explanation. 3. Explain why...
The Home Depot reported earnings from continuing operations before the provision for income taxes of $6,068...
The Home Depot reported earnings from continuing operations before the provision for income taxes of $6,068 million for the year ending January 29, 2012, in its 10-K. Footnote 6 revealed that the provision for income taxes was $2,185 million and that the current amount paid to the federal, state, and foreign governments was $1,950 million. 1. Compute the earnings from continuing operations after taxes. 2. Prepare the journal entry to record taxes on ordinary activities. Omit explanation. 3. Explain why...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $394,000 2016 451,000 2017 528,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $164,000. The equipment is expected to last three years and have a(n) $14,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $94,000 in 2015, $38,000 in 2016, and $18,000...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $473,000 2016 541,000 2017 634,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $196,000. The equipment is expected to last three years and have a(n) $16,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $113,000 in 2015, $45,000 in 2016, and $22,000...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $244,000 2016 279,000 2017 327,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $101,000. The equipment is expected to last three years and have a(n) $8,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $58,000 in 2015, $23,000 in 2016, and $12,000...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows:...
Deferred Tax Calculations (Appendix) Wyhowski Inc. reported income from operations, before taxes, for 2015-2017 as follows: 2015 $402,000 2016 460,000 2017 539,000 When calculating income, Wyhowski deducted depreciation on plant equipment. The equipment was purchased January 1, 2015, at a cost of $167,000. The equipment is expected to last three years and have a(n) $14,000 salvage value. Wyhowski uses straight-line depreciation for book purposes. For tax purposes, depreciation on the equipment is $96,000 in 2015, $38,000 in 2016, and $19,000...
Income Overview Income from individual income taxes in 2016 is estimated to be about 49% of...
Income Overview Income from individual income taxes in 2016 is estimated to be about 49% of all receipts that year. Income tax is levied on over 100 million American households each year. Payroll tax income is estimated to be about 33% of all receipts that year. Payroll taxes are taxes that employers are required to pay when they pay their staff their salaries. Corporate income taxes are estimated to make up 9% of all receipts that year. Corporate income tax...
Choice Hotels Marriott International (2016/2015)-1 (2016/2015)-1 Ratios 2016 2015 2016 2015 Percent Change from 2015 to...
Choice Hotels Marriott International (2016/2015)-1 (2016/2015)-1 Ratios 2016 2015 2016 2015 Percent Change from 2015 to 2016 Percent Change from 2015 to 2016 Choice Marriott Basic earning power (BEP) ratio = earnings before interest and taxes (EBIT) / total assets 3.5 3.2 0.06 0.23 0.09 2.98 Return on equity (ROE) = net profit / total equity -0.45 -0.32 0.15 -0.24 0.41 -1.61 Return on assets (ROA) = net income / total assets 0.16 0.18 0.03 0.14 -0.08 -0.77 Profit margin...
Golden Heart company began operations in 2016 and had a financial income before taxes and taxable...
Golden Heart company began operations in 2016 and had a financial income before taxes and taxable income for the year ending 12/31/2016 Of 300,000. Their tax rate was 30%. They properly recorded the following entry at 12/31/2016: Account                                                 Dr                   Cr Income Tax expense             90,000                         Income Tax payable                         90,000 Early in 2017 they paid their taxes and continued operating their business. Due to downturn in the economy. They had net operating loss of 800,000 for the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT