For 2018, Gourmet Kitchen Products reported $23 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 8% and its federal-plus-state income tax rate was 36%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2018? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.

For 2018, Gourmet Kitchen Products reported $23 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 8% and its federal-plus-state income tax rate was 36%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2018? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary.

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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(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 $455
(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $70 million, total assets of $45 million, and total liabilities of $25 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 13 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.)
Plank’s Plants had net income of $10,000 on sales of $40,000 last year. The firm paid a dividend of $2,300. Total assets were $700,000, of which $350,000 was financed by debt. a. What is the firm’s sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.) b. If the firm grows at its sustainable growth rate, how much debt will be issued next year? (Do not round intermediate calculations.) c. What would be the maximum possible growth rate if the firm did not issue any debt next year? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
Target industries reported $11,500 of sales and $5,000 of operating costs (including depreciation). The company has $20,500 of total invested capital, the weighted average cost of that capital (the WACC) was 8%, and the federal-plus-state income tax rate was 40%. What was the firm's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during 2017?
For 2021, Gourmet Kitchen Products reported $22 million of sales and $19 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after-tax cost of capital is 10%, and its federal-plus-state income tax rate was 25%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2021?
(Using common-size financial statements) The S&H Construction Company expects to have total sales next year totaling $14,600,000. In addition, the firm pays taxes at 35 percent and will owe $294,000 in interest expense. Based on last year's operations the firm's management predicts that its cost of goods sold will be 63 percent of sales and operating expenses will total 27 percent. What is your estimate of the firm's net income (after taxes) for the coming year? Complete the pro-forma income statement below: (Round to the nearest dollar.) Pro-Forma Income Statement Sales Cost of goods sold Gross profit Operating expenses Net operating income Interest expense Earnings before taxes Taxes Net income $ $ $ $ $ C
(Related to Checkpoint 4.3) (Analyzing Profitability) In 2016, the Allen Corporation had sales of $63 million, total assets of $40 million, and total liabilities of $23 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 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 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 $8.82 million. (Round to two decimal places.) The firm's 2016 net income is $ million. (Round to two decimal places.) (---))
Company XYZ, an all-equity firm, reported incremental revenues (net income) of $336 million for the most recent year. The firm had depreciation expenses of $141 million and capital expenditures of $196 million. The company also had an increase in net working capital of $20 million. What is the free cash flow? Enter your answer in dollars and round to the nearest dollar.
. A firm has total sales of $64 million. It has gross profit of $12 million, operating income of $8.5 million, and net income of $8 million. a) What is the firm's net profit margin? b) If net profit increased to 15% from your answer in a), what percentage change does this represent?
(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 $ $ $ $ $
Calculate Return on Investment (ROI) and Economic Value Added (EVA).Use the following data for Eastern Investments Company to calculate ROI and EVA for 2013 and 2014. Analyze the results. Eastern Investments 2013 2014 Sales $325,000,000 $395,000,000Net Operating Profit After Tax $55,000,000 $60,000,000Net Income $35,000,000 $42,000,000Invested Capital $125,000,000 $145,000,000Adjusted Average Invested Capital $350,000,000 $380,000,000Cost of Capital 11% 11%Required:Calculate ROI for 2013 and 2014Calculate EVA for 2013 and 2014Is Eastern Investments performance improving year on year? Why?
Problem Walk-Through For 2021, Gourmet Kitchen Products reported $22 million of sales and $18 million of operating costs (including depreciation). The company has $15 million of total invested capital. Its after- tax cost of capital is 10% and its federal-plus-state income tax rate was 25%. What was the firm's economic value added (EVA), that is, how much value did management add to stockholders' wealth during 2021? Write out your answer completely. For example, 25 million. should be entered as 25,000,000. Round your answer to the nearest dollar, if necessary. $ eBook

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