During the current year, Kite Corporation had average total assets are $500,000, total asset turnover of 1.10, and a net profit margin percentage of 12.0%. Kite's interest expense equals 5.0% of its total liabilities and its income tax rate is 21.0%. For purposes of computing its operating income (or EBIT), Kite's contribution margin ratio is 25%. If Kite's return on equity is 26.4%, what is Kite's equity multiplier? Round to two decimal points. O 0.50 O 0.67 O 1.50 2.00 None of the above

During the current year, Kite Corporation had average total assets are $500,000, total asset turnover of 1.10, and a net profit margin percentage of 12.0%. Kite's interest expense equals 5.0% of its total liabilities and its income tax rate is 21.0%. For purposes of computing its operating income (or EBIT), Kite's contribution margin ratio is 25%. If Kite's return on equity is 26.4%, what is Kite's equity multiplier? Round to two decimal points. O 0.50 O 0.67 O 1.50 2.00 None of the above

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Red Company has a profit margin of 15 percent on sales of $20,000,000. If the firm has a debt of $7,500,000, total assets of $22,500,000, and an interest cost on a total debt of 5 percent, what is the firm's return on total assets (ROA)? (Round answer to two decimal places.)
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 8%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,201. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 51 Inventories 360 Long-term debt 1,150 Plant and equipment, net 2,160 Common equity 1,669 Total assets $2,880 Total liabilities and equity $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. %
Wyatt Oil has a net profit margin of 4.0%, a total asset turnover of 2.2, total assets of $525 million, and a book value of equity of $220 million. Wyatt Oil's current return-on-equity (ROE) is closest to: A) 8.8% B) 9.5% C) 21.0% D) 22.8%
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 14%, its before-tax cost of debt is 10%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,183. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Cash Assets Accounts receivable Inventories Liabilities And Equity $ 120 Accounts payable and accruals $ 10 53 240 360 Short-term debt Long-term debt 1,130 30 Plant and equipment, net Total assets 2,160 $2,880 Common equity Total liabilities and equity 1,687 $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. %
Mason Corporation had $1,096,000 in invested assets, sales of $1,217,000, operating income amounting to $231,000, and a desired minimum return on investment of 13%. The profit margin (rounded to one decimal place) for Mason Corporation is
Local Co. has sales of $10.4 million and cost of sales of $6.3 million. Its selling, general and administrative expenses are $490,000 and its research and development is $1.2 million. It has annual depreciation charges of $1.2 million and a tax rate of 28%. a. What is Local's gross margin? b. What is Local's operating margin? c. What is Local's net profit margin? a. What is Local's gross margin? Local's gross margin is%. (Round to two decimal places.)
Green Penguin Pencil Company has a total asset turnover ratio of 6.00x, net annual sales of $25 million, and operating expenses of $11 million (including depreciation and amortization). On its balance sheet and income statement, respectively, it reported total debt of $1.75 million on which it pays a 11% interest rate. To analyze a company's financial leverage situation, you need to measure the firm's debt management ratios. Based on the preceding information, what are the values for Green Penguin Pencil's debt management ratios? Ratio Debt ratio Times-interest-earned ratio Value Influenced by a firm's ability to make interest payments and pay back its debt, if all else is equal, creditors would prefer to give loans to companies with times-interest-earned ratios (TIE).
Recreational Supplies Co. has net sales of $9,359,409, an ROE of 15.60 percent, and a total asset turnover of 3.48 times. If the firm has a debt-to-equity ratio of 1.23, what is the company's net income?
Lauryn's Doll Company had EBIT last year of $58 million, which is net of a depreciation expense of $5.8 million. In addition, Lauryn's made $6.3 million in capital expenditures and increased net working capital by $2.5 million. Assume that Lauryn's has a reported equity beta of 1.9, a debt-to-equity ratio of 0.6, and a tax rate of 21 percent. What is Lauryn's FCF for the year? Note: Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. FCF million
(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,500,000. In addition, the firm pays taxes at 35 percent and will owe $306,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 60 percent of sales and operating expenses will total 26 percent. What is your estimate of the firm's net income (after taxes) for the coming year? Pro-Forma Income Statement Sales Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Taxes Net income $ $ $ $ $
Rivera Corporation has an operating income of $3 million and a tax rate of 32%. Capital invested is $12 million and the after-tax percentage cost of capital is 9%. Determine the economic value added (EVA) of the company.