Calculate return on assets(ROA) for 2009 and 2010 and Comment on the results.
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XYZ Co. wants to know if its profitability performance has increased from 2009 to 2010. The company had net income of $48,000 in 2009 and $50,000 in 2010. Total assets were $480,000 at the end of 2009, and $560,000 at the end of 2010. Calculate return on assets(ROA) for 2009 and 2010 and Comment on the results.
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- (Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $69 million, total assets of $48 million, and total liabilities of $18 million. The interest rate on the company's debt is 6.4 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.) 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.)AllState Trucking Co. has the following ratios compared to its industry for 2007. AllState Trucking Industry Return on sales (i.e. Profit margin) 3% 8% Return on assets 15% 10% Please use Du Pont system of analysis to calculate and explain why the return-on-assets ratio is so much more favorable than the return-on-sales ratio compared to the industry.The year-end balance sheet of Time Company shows net operating profit margin (NOPM) of 3.1%, net operating asset turnover (NOAT) of 4.41, return on equity of 3.5%, and adjusted return on assets of 2.2%.What is the company's nonoperating return? (10.2)% 1.3% (12.3)% (10.6)% None of these are correct.
- Booker Inc. is a distributor of building supplies. Management for the company has developed the following forecasts of net income: Table 8 Forecasted Net Income of Booker Inc. in USD (As of December 31st of each year) Year Forecasted Net Income 2011 $111,432 2012 $131,490 2013 $156,473 2014 $178,379 2015 $199,784 Management expects net income to grow at a rate of 7% per year after 2015 and the company's cost of equity capital is 14%. Management has set a dividend payout ratio equal to 25% of net income and plans to continue this policy. Booker’s common shareholders' equity at January 1, 2011, is $544,902. Using the residual income model, compute the value of equity of Booker as of January 1, 2011. Using the dividend discount model, compute the value of equity of Booker as of January 1, 2011. Compare the results in parts (a) and (b) and discuss possible reasons for any discrepancies.(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $64 million, total assets of $42 million, and total liabilities of $25 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 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 the firm's liabilities.) 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.)A company’s income before interest expense and income taxes in 2010 is $225,000 and $200,000 in 2011. Its interest expense was $45,000 for each year. Calculate the company’s times interest earned ratio for 2010 and 2011 and then comment on the level of risk. 2010: 2011: Comment on its level of risk.
- In its 2014 annual report, Campbell Soup Company reports beginning-of-the-year total assets of $8,113 million, end-of-the-year total assets of $8,323 million, total sales of $8,268 million, and net income of $807 million. (a) Compute Campbell’s asset turnover. (b) Compute Campbell’s profit margin on sales. (c) Compute Campbell’s return on assets using (1) asset turnover and profit margin and (2) net income. (Round to two decimal places.)Red Spark Incorporated is interested in assessing the following scenarios on its indicators of profitability. Solve each scenario independently. a. Red Spark has taken significant steps to decrease expenses and expects its net income to increase by $8 million to $68 million. If its profit margin is 5.0%, what will the profit margin be after considering the decreased expenses? b. Red Spark has taken significant steps to decrease expenses and expects its net income to increase by $8 million to $68 million. If its average total assets are $494 million, what will its return on assets be?For the FY 2016, Alpha Company had net sales of $950,000 and a net income of $65,000, paid income taxes of $30,000, and had before-tax interest expense of $15,000. Use this information to determine the: 1. Times Interest Earned Ratio. 2. Profit Margin.
- For fiscal year 2021, Costco Wholesale Corporation ( COST) had a net profit margin of 2.60%, asset turnover of 3.24, and a book equity multiplier of 3.28. a. Use this data to compute Costco's ROE using the DuPont Identity. b. If Costco's managers wanted to increase its ROE by 1.10 percentage points, how much higher would their new asset turnover need to be? c. If Costco's net profit margin fell by 1.10 percentage points, by how much would their asset turnover need to increase to maintain their ROE? a. Use this data to compute Costco's ROE using the DuPont Identity. Costco's ROE is %. (Round to two decimal places.) If Costco's net profit margin fell by 1.05 percentage points, by how much would their asset turnover need to increase to maintain their ROE?(Analyzing the quality of firm earnings) Kabutell, Inc. had net income of $700,000, cash flow from financing activities of $60,000, depreciation expenses of $40,000, and cash flow from operating activities of $600,000. a. Calculate the quality of earnings ratio. What does this ratio tell you? b. Kabutell, Inc. reported the following in its annual reports for 2011-2013: ($ million) 2011 Cash Flow from Operations $477 Capital Expenditures (CAPEX) $461 (Click on the icon in order to copy its contents into a spreadsheet.) Calculate the average capital acquisitions ratio over the three-year period. How would you interpret these results? a. What is Kabutell's quality of earnings ratio? % (Round to one decimal place.) 2012 $403 $447 C 2013 $471 $455Peyton's Palace has net income of $13.4 million on sales revenue of $114 million. Total assets were $80 million at the beginning of the year and $88 million at the end of the year. Calculate Peyton's return on assets, profit margin, and asset turnover ratios. (Enter your answers in millions. (i.e., $5,500,000 should be entered as 5.5).) Return on Assets Numerator/Denominator Amounts Peyton's Palace % Profit Margin Numerator/Denominator Amounts Peyton's Palace % Asset Turnover Numerator/Denominator Amounts Peyton's Palace times
