Question

In: Accounting

Quantify the Effects of Managerial Actions on ROPI and Components BCS Enterprises reports the following financial...

Quantify the Effects of Managerial Actions on ROPI and Components
BCS Enterprises reports the following financial data just prior to its fiscal year ended June 30, 2017 ($ millions).

BCS Enterprises
Balance Sheet
Cash $300

   Accounts payable

$900
Accounts receivable 900

   Long-term debt

1,800
Inventory 1,500
Property, plant & equipment 3,000

Equity

3,000
Total assets $5,700

   Total liabilities and equity

$5,700


Actual Forecasted
June 2017 June 2018
Sales $3,600 $3,930
NOPAT $630 $648
NOA $4,500 $4,635
WACC 7%



a. Compute ROPI for FY2017 and FY2018. Net operating assets (NOA) at June 30, 2016 were $4,050.
Round answers to one decimal place, if applicable.

2017 2018
ROPI Answer $Answer



b. The company is contemplating taking the following actions before the end of June 2017. (These actions are not reflected in any of the financial data reported above.) For each of the actions, determine the effect on residual operating income for the fiscal year ended June 30, 2018.

Reduce inventory by 10% which reduces accounts payable by 5%.

Decrease property, plant and equipment (PPE) by 20% with no consequent impact on NOPAT.

Engage in a sale leaseback of a major building. The company will sell 50% of its PPE at book value and increase rental costs by $90 after tax, per year.

Increase debt $900, which increases interest expense by $45.

Round answers to one decimal place, if applicable.

Actual Forecasted Action
June 2017 June 2018 1 2 3 4
NOPAT $Answer $Answer Answer Answer Answer Answer
NOABeg Answer $Answer Answer Answer Answer Answer
ROPI Answer $Answer Answer Answer Answer Answer

Solutions

Expert Solution


Related Solutions

Distinguish between managerial and financial accounting Primary Users of Reports Types and frequency of reports (examples)...
Distinguish between managerial and financial accounting Primary Users of Reports Types and frequency of reports (examples) Purpose of Reports ( examples) What is the value chain? example
Which of the following statements is FALSE? Financial accounting reports historical transactions. Managerial accounting focuses on...
Which of the following statements is FALSE? Financial accounting reports historical transactions. Managerial accounting focuses on reporting the consolidated results of the company as a whole. Managerial accounting reports do not have to conform to generally accepted accounting principles. Financial accounting helps investors and creditors make decisions.
Differentiate managerial accounting from financial accounting using the following criteria: a) Primary users of reports Type...
Differentiate managerial accounting from financial accounting using the following criteria: a) Primary users of reports Type and frequency of reports Purpose of reports Contents of reports Verification Process Give concrete examples for each difference.
Consider the effects of the following policy actions. To illustrate their effects identify real world policy...
Consider the effects of the following policy actions. To illustrate their effects identify real world policy situations in which they are used. 1.Setting a maximum quantity produced or employed (available for employment) 2.Setting a minimum price for the product or service
Distinguish between managerial and financial accounting as to primary users of reports? What types and frequency...
Distinguish between managerial and financial accounting as to primary users of reports? What types and frequency of reports, and the content and purpose of reports? how does it effect a comapny
How Accounting Equation Effects Financial Statement Components ( in detail please)
How Accounting Equation Effects Financial Statement Components ( in detail please)
Describe the effects of each of the following managerial decisions or economic influences on the value...
Describe the effects of each of the following managerial decisions or economic influences on the value of the firm: A.) The firm is required to install new equipment to reduce air pollution B.) Through heavy expenditures on advertising, the firm's marketing department increases sales substantially. C.) The production department purchases new equipment that lowers manufacturing costs. D.) The firm raises prices. Quantity demanded in the short run is unaffected, but in the longer run, unit sales are expected to decline....
5. Explain the effects of the following actions on equilibriumincome, assuming that the marginal propensity...
5. Explain the effects of the following actions on equilibrium income, assuming that the marginal propensity to consume is 0.8A. Government purchases rise by $40 billion.B. Taxes fall by $40 billion.
A nurse is planning care for a client who reports insomnia. Which of the following actions...
A nurse is planning care for a client who reports insomnia. Which of the following actions should the nurse perform shortly before bedtime? A.   offer a wet washcloth for the client to wash her face B.   prepare hot cocoa or tea for the client C.    provide a late supper D.   perform range of motion exercises
____ 1. Which of the following is a characteristic of financial, but not managerial, accounting: A)...
____ 1. Which of the following is a characteristic of financial, but not managerial, accounting: A) Information includes economic and non-financial data as well as financial data. B) Information is historically based and focuses on the organization as a whole. C) Information is provided primarily to insiders such as managers. D) Information is reported continuously with a present or future orientation. ____ 2. Per our day-one class discussion, managerial accounting information is often not available to the public. The internal...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT