Question
In: Accounting
38. Anthony’s Services, Inc. reported the following balance sheet information for the year 2017. Based on...
38. Anthony’s Services, Inc. reported the following balance sheet information for the year 2017. Based on the following information, calculate ROTA (return on total assets). Total Assets, December 31, 2017 $586,000 Total Assets, December 31, 2016 $505,000 For Year Ended December 31, 2017: Interest Expense $27,000 Interest Income 20,000 Net Income $66,100 A) 7.93% B) 11.28% C) 17.07% D) 15.78% What does this result tell us?
Solutions
Expert Solution
The answer is c) 17.07%
Explanation:
Return on total assets (ROTA) =( Earnings before interest and tax ÷ Average total assets) × 100
= ($93,100 ÷ $545,500 ) × 100 = 17.07 %
Working Note : EARNINGS BEFORE INTEREST AND TAX (EBIT) = Net income + interest expense + tax
= $ 66,100 +$27,000 = $ 93,100 ( Tax is not given in question so not added )
AVERAGE TOTAL ASSETS =( Beginning total assets + Ending total assets) ÷ 2 , where aveage total assets should not include accumulated depreciation and any allowances for doubtful account.
= ($505,000 + $586,000) ÷2 = $545,500
ROTA tells you how efficiently the company is using the assets of the business to create return.This ratio tells how well the company can convert its investment in assets into profits.
Increase in ROTA means better use of assets to generate returns for firm.
The higher the ROTA the more productive and efficient management is in utilizing economic resources.
The higher the ROTA the more profit a company makes relative to its investment in assets.
ekkarill92 answered 1 year agoRelated Solutions
Cordova, Inc., reported the following receivables in its December 31, 2017, year-end balance sheet: Current assets:...
Cordova, Inc., reported the following receivables in its
December 31, 2017, year-end balance sheet:
Current assets:
Accounts receivable,
net of $51,000 in allowance for
uncollectible accounts
$
383,000
Interest receivable
22,950
Notes receivable
410,000
Additional information:
The notes receivable account consists of two notes, a $120,000
note and a $290,000 note. The $120,000 note is dated October 31,
2017, with principal and interest payable on October 31, 2018. The
$290,000 note is dated March 31, 2017, with principal and 10%...
A) On December 31, 2017, SPK Corp reported the following information on its balance sheet: Accounts...
A) On December 31, 2017, SPK Corp reported the following
information on its balance sheet:
Accounts
Receivable $900,000
Less:
Allowance for Doubtful
Accounts
54,000 (credit)
During 2018, the company had the following transactions:
Sales
on
account $3,000,000
Collections
of accounts
receivables
2,850,000
Write-off
of accounts deemed
uncollectible
60,000
Recovery
of Bad debts previously written
off
12,000
(not
included in collections above)
If bad debts are estimated to be 1.5% of credit sales, determine
the ending balance in the Allowance
for
Doubtful Accounts...
The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017...
The Murdock Corporation reported the following balance sheet
data for 2018 and 2017:
2018
2017
Cash
$
96,245
$
33,155
Available-for-sale debt securities (not cash equivalents)
24,000
102,000
Accounts receivable
97,000
83,550
Inventory
182,000
160,300
Prepaid insurance
3,030
3,700
Land, buildings, and equipment
1,284,000
1,142,000
Accumulated depreciation
(627,000
)
(589,000
)
Total assets
$
1,059,275
$
935,705
Accounts payable
$
91,640
$
165,670
Salaries payable
26,800
33,000
Notes payable (current)
40,300
92,000
Bonds payable
217,000
0
Common stock
300,000...
The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017...
The Murdock Corporation reported the following balance sheet
data for 2018 and 2017:
2018
2017
Cash
$77,375
$22,955
Available-for-sale debt securities
(not cash equivalents)
15,500
85,000
Accounts receivable
80,000
68,250
Inventory
165,000
145,000
Prepaid insurance
1,500
2,000
Land, buildings, and equipment
1,250,000
1,125,000
Accumulated depreciation
(610,000)
(572,000)
Total assets
$979,375
$876,205
Accounts payable
$76,340
$148,670
Salaries payable
20,000
24,500
Notes payable (current)
25,000
75,000
Bonds payable
200,000
0
Common stock
300,000
300,000
Retained earnings
358,035
328,035
Total...
The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017...
The Murdock Corporation reported the following balance sheet
data for 2018 and 2017:
2018
2017
Cash
$
82,925
$
25,955
Available-for-sale debt
securities (not cash equivalents)
18,000
90,000
Accounts receivable
85,000
72,750
Inventory
170,000
149,500
Prepaid insurance
1,950
2,500
Land, buildings, and
equipment
1,260,000
1,130,000
Accumulated depreciation
(615,000
)
(577,000
)
Total assets
$
1,002,875
$
893,705
Accounts payable
$
80,840
$
153,670
Salaries payable
22,000
27,000
Notes payable (current)
29,500
80,000
Bonds payable
205,000
0
Common stock
300,000...
The Murdock Corporation reported the following balance sheet data for 2018 and 2017: 2018 2017 Cash...
The Murdock Corporation reported the following balance sheet
data for 2018 and 2017:
2018
2017
Cash
$77,375
$22,955
Available-for-sale debt securities
(not cash equivalents)
15,500
85,000
Accounts receivable
80,000
68,250
Inventory
165,000
145,000
Prepaid insurance
1,500
2,000
Land, buildings, and equipment
1,250,000
1,125,000
Accumulated depreciation
(610,000)
(572,000)
Total assets
$979,375
$876,205
Accounts payable
$76,340
$148,670
Salaries payable
20,000
24,500
Notes payable (current)
25,000
75,000
Bonds payable
200,000
0
Common stock
300,000
300,000
Retained earnings
358,035
328,035
Total liabilities and shareholders'...
Calloway Company reported the following balance sheet data for 2018 and 2017: 2018 2017 Cash $77,375...
Calloway Company reported the following balance sheet data for
2018 and 2017:
2018
2017
Cash
$77,375
$22,955
Available-for-sale debt securities
(not cash equivalents)
15,500
85,000
Accounts receivable
80,000
68,250
Inventory
165,000
145,000
Prepaid insurance
1,500
2,000
Land, buildings, and equipment
1,250,000
1,125,000
Accumulated depreciation
(610,000)
(572,000)
Total assets
$979,375
$876,205
Accounts payable
$76,340
$148,670
Salaries payable
20,000
24,500
Notes payable (current)
25,000
75,000
Bonds payable
200,000
0
Common stock
300,000
300,000
Retained earnings
358,035
328,035
Total liabilities and shareholders' equity...
The January 28, 2017 (fiscal year 2016) financial statements of Caleres, Inc. reported the following information...
The January 28, 2017 (fiscal year 2016) financial statements of
Caleres, Inc. reported the following information (in
thousands):
Caleres, Inc.
2016
2015
Cost of sales
$1,517,397
$1,529,527
Inventories, net
585,764
546,745
LIFO reserve
4,345
4,094
The footnotes to the 2016 financial statements of Skechers
U.S.A., Inc. reported that the company uses the FIFO
method of accounting for inventories. Financial statements
reported the following (in thousands):
Skechers U.S.A., Inc.
2016
2015
Cost of sales
$1,928,715
$1,723,315
Inventories,...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as
reported on the firm’s balance sheet = $3 billion, price/earnings
ratio = 11, common shares outstanding = 140 million, and
market/book ratio = 2.3. The firm's market value of total debt is
$6 billion, the firm has cash and equivalents totaling $250
million, and the firm's EBITDA equals $3 billion. What is the price
of a share of the company's common stock? Do not round intermediate
calculations. Round your answer to...
You are given the following information: Stockholders' equity as reported on the firm’s balance sheet =...
You are given the following information: Stockholders' equity as
reported on the firm’s balance sheet = $5.5 billion, price/earnings
ratio = 11.5, common shares outstanding = 52 million, and
market/book ratio = 1.4. Calculate the price of a share of the
company's common stock. Round your answer to the nearest cent.
ADVERTISEMENT
ADVERTISEMENT
Latest Questions
- Describe System Development Life Cycle (SDLC) and how it is used.
- What symbolism do you find in the play,Oedipus?
- • Using the Scanner class to obtain input from the user. • Using printf to output...
- In each of the following situations, develop a tentative plan for the client. List the various...
- MARGI sells different types of wine. Customers place orders to the most popular “Summer Wine” at...
- Java. If possible please put explanations for each line of code. Write a test program that...
- . Use the following information to calculate your company's expected return State Probability Return Boom 20%...
ADVERTISEMENT