Question

In: Accounting

In 2016, the Allen Corporation had sales of $62 milion, total assets of $42 milion, and total liablities of $21 milion

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $62 milion, total assets of $42 milion, and total liablities of $21 milion. The interest rate on the company's debt is 6.1 percent, and its tax rate is 35 percent. The operating profit margin is 11 percent.

a. Compute the firm's 2016 net operating income and net income.

b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.)

Expert Solution

Question 1:

Operating Profit Percentage = 11%

Net Operating Income = 11% of Sales = 11% x $ 62m = $ 6.82 million

Interest Expense = 6.1% of $ 21 m = $ 1.281 million

Net Income = (Net Operating Income - Interest Expense) - Tax Expense

Net Income = ( 6.82 - 1.281)million - 35%

Net Income = $ 5.539 million - 35%

Net Income = $ 3.6 Million

Question 2:

Operating Return on Assets = Operating Income / Assets

Operating Return on Assets = 6.82 / 42 = 16.29%

Total Assets = Total Liabilities + Total Equity

$ 42 million = $ 21 million + Total Equity

Total Equity = $ 21 million

Return on Equity = Net Income / Equity x 100

Return on Equity = $ 3.6 m / $ 21 m x 100 = 17.14 %

1. Net Operating Income = $6.82 million
Net Income: $3.6 million

2. Operating Return on Assets: 16.29%
Return on Equity: 17.14%

Soumik Mallick Choudhury answered 2 years ago

In 2016, the Allen Corporation had sales of $ 62 million, total assets of $ 45...

In 2016, the Allen Corporation had sales of $ 62 million, total assets of $ 45 million, and total liabilities of $ 25 million. The interest rate on the company's debt is 5.6 percent, and its tax rate is 35 percent. The operating profit margin is 14 percent. a. Compute the firm's 2016 net operating income and net income. The firm's 2016 net operating income is $___ million. (Round to two decimal places.) The firm's 2016 net income is...

In 2016, the Allen Corporation had sales of $62 million, total assets of $45 million, and...

In 2016, the Allen Corporation had sales of $62 million, total assets of $45 million, and total liabilities of $25 million. The interest rate on the company's debt is 5.6 percent, and its tax rate is 35 percent. The operating profit margin is 14 percent. Calculate the firm's operating return on assets AND return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.) (round answer to 2 decimal places)

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016. the Allen Corporation had sales of $62 million, total assets of $48 million, and total

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016. the Allen Corporation had sales of $62 million, total assets of $48 million, and total liabilities of S22 million. The interest rate on the company's debt is 6.1 percent. and its tax rate is 35 percent. The operating profit margin is 14 percent. a. Compute the firm's 2016 net operating income and net income.b. Calculate the firm's operating return on assets and return on equity.

In 2016, the Allen Corporation had sales of $ 60 million, total assets of $ 45...

In 2016, the Allen Corporation had sales of $ 60 million, total assets of $ 45 million, and total liabilities of $ 23 million. The interest rate on the company's debt is 5.9 percent, and its tax rate is 35 percent. The operating profit margin is 14 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid...

In 2016, the Allen Corporation had sales of $61 million, total assets of $44 million, and...

In 2016, the Allen Corporation had sales of $61 million, total assets of $44 million, and total liabilities of $17 million. The interest rate on the company's debt is 5.7 percent, and its tax rate is 35 percent. The operating profit margin is 12 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of...

(Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 61$61 million, total assets of...

(Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 61$61 million, total assets of $ 50$50 million, and total liabilities of $ 20$20 million. The interest rate on the company's debt is 5.85.8 percent, and its tax rate is 3535 percent. The operating profit margin is 1212 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must...

In 2016, the Allen Corporation had sales of $60 million, total assets of $50 million, and total liabilities of $16 million.

In 2016, the Allen Corporation had sales of $60 million, total assets of $50 million, and total liabilities of $16 million. The interest rate on the company's debt is 5.7%, and it's tax rate is 35%. The operating profit margin is 13%.Please answer: a. Compute the firm's 2016 net operating income and net income.b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be paid on all of the firm's liabilities.)

The Malia Corporation had sales in 2019 of $64 million, total assets of $42 million, and...

The Malia Corporation had sales in 2019 of $64 million, total assets of $42 million, and total liabilities of $ 21 million. The interest rate on the company's debt is 6.6 percent and its tax rate is 21 percent. The operating profit margin was 12 percent. What were the company's operating income and net income? What was the operating return on assets and return on equity? Assume that interest must be paid on all of the debt.

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $68 million,...

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $68 million, total assets of $43 million, and total liabilities of $16 million. The interest rate on the company's debt is 5.5 percent, and its tax rate is 35 percent. The operating profit margin is 12 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest...

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 66million,...

(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $ 66million, total assets of $ 50 million, and total liabilities of 21million. The interest rate on the company's debt is 5.6percent, and its tax rate is 35percent. The operating profit margin is 14 percent. a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating return on assets and return on equity. (Hint: You can assume that interest must be...