Question

In: Finance

Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries

Consider a company with sales of $18,000.0 million, cost of goods sold of 42% of sales, other expenses including salaries ( we usually call this SG&A for selling, general and administrative) of 1750.0million, depreciation of 2250.0 million, and interest expense of 2300 million. tax rate =21%.

a. generate an income statement and show net income

b. what is the company's operating cash flow?

c. if there are 775.2 million shares outstanding, what is the EPS?

d. if the company has a payout ratio of 20%, what is the dividends per share?

Solutions

Expert Solution

a). Preparing the Income Statment :-

Particular Amount in millions of $
Sales           18,000.00
Less: COGS [@42% of Sales]           (7,560.00)
Gross Profit           10,440.00
Less: Depreciation           (2,250.00)
Less:SG&A           (1,750.00)
EBIT             6,440.00
interest Expense           (2,300.00)
Taxable Income             4,140.00
Taxation (35%)               (869.40)
Net income                3,270.60

SO, Net Income is $3270.60 millions

b). - Operating cash flow = EBIT(1-Tax rate) + Depreciation

Operating cash flow = $6440 millions(1-0.21) + $2250 millions

Operating cash flow = $7,337.6 millions

c). Earnings per share(EPS) = Net income/No of shares outstanding

EPS = $3270.60 millions/775.2 million

EPS = 4.22 per share

d). Payout ratio = 20%

Dividend per share = EPS*Payout ratio

Dividend per share = $4.22*20%

Dividend per share = $0.84 per share

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

sales are1.53 million, cost of goods sold is 615000, depriciation, expense is 153,000, other operating expenses...
sales are1.53 million, cost of goods sold is 615000, depriciation, expense is 153,000, other operating expenses is $303,000 addition to retained earnings is 145,700,dividends per share is $1,tax rate is 30 percent,and number of shares of common stock outstanding is 93,000 Latonya's Flop Shops has no preferred stock outstanding. use above info to calculate the times interest earned ratio for Latonya's Flop Shops, inc (rd your ans to 2 decimal places
Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of...
Kaler Company has sales of $1,410,000, cost of goods sold of $785,000, other operating expenses of $198,000, average invested assets of $4,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin answer to the nearest whole percentage, (i.e., 0.1234 should be entered as 12%). Round your Investment Turnover answers to 4 decimal places.) Please calculate...
Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of...
Solano Company has sales of $700,000, cost of goods sold of $470,000, other operating expenses of $50,000, average invested assets of $2,100,000, and a hurdle rate of 9 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...
Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of...
Solano Company has sales of $760,000, cost of goods sold of $500,000, other operating expenses of $40,000, average invested assets of $2,250,000, and a hurdle rate of 11 percent. 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) 2....
Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of...
Kaler Company has sales of $1,450,000, cost of goods sold of $795,000, other operating expenses of $208,000, average invested assets of $4,600,000, and a hurdle rate of 12 percent. Required: 1. Determine Kaler’s return on investment (ROI), investment turnover, profit margin, and residual income. 2. Several possible changes that Kaler could face in the upcoming year follow. Determine each scenario’s impact on Kaler’s ROI and residual income. (Note: Treat each scenario independently.) a. Company sales and cost of goods sold...
Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of...
Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of $45,000, average invested assets of $2,150,000, and a hurdle rate of 10 percent. 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.) Return...
Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of...
Solano Company has sales of $720,000, cost of goods sold of $480,000, other operating expenses of $45,000, average invested assets of $2,150,000, and a hurdle rate of 10 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)...
Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of...
Solano Company has sales of $840,000, cost of goods sold of $540,000, other operating expenses of $70,000, average invested assets of $2,450,000, and a hurdle rate of 11 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)...
Solano Company has sales of $800,000, cost of goods sold of $520,000, other operating expenses of...
Solano Company has sales of $800,000, cost of goods sold of $520,000, other operating expenses of $35,000, average invested assets of $2,350,000, and a hurdle rate of 11 percent. 2. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.) (Enter your ROI percentage answers to 2 decimal places, (i.e., 0.1234 should be entered as 12.34%.))    a. Company sales and cost of...
Solano Company has sales of $820,000, cost of goods sold of $530,000, other operating expenses of...
Solano Company has sales of $820,000, cost of goods sold of $530,000, other operating expenses of $60,000, average invested assets of $2,400,000, and a hurdle rate of 11 percent. Required: 1. Determine Solano’s return on investment (ROI), investment turnover, profit margin, and residual income. (Do not round your intermediate calculations. Enter your ROI and Profit Margin percentage answer to the nearest 2 decimal places, (i.e., 0.1234 should be entered as 12.34%). Round your Investment Turnover answer to 4 decimal places.)...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT