• Last year, J&H Corp. reported a book value of $700 million in current assets, of which 15% is cash, 17% is short-term investments, and the rest is accounts receivable and inventory. • The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period. • The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million in long-term assets last year. Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Net sales Operating costs, except depreciation and amortization Depreciation and amortization Total operating costs Operating income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net income $1,500 1,200 60 1,260 $240 24 $216 86 $130 Industry Average $1,875 1,500 75 1,575 $300 45 $255 102 $153 Based on the information given to Jeffrey, he submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply. J&H Corp.'s NOPAT is $144.0 million, which is lower than the industry average of $180.0 million. J&H Corp. has $-$14.0 million of noninterest-bearing current assets net of noninterest-charging liabilities. J&H Corp.'s total net operating capital consists of its net operating working capital and total investment in long-term assets. J&H Corp.'s net operating working capital is $105.0 million. The company has $581.0 million in operating assets and $595.0 million in operating liabilities.
• Last year, J&H Corp. reported a book value of $700 million in current assets, of which 15% is cash, 17% is short-term investments, and the rest is accounts receivable and inventory. • The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no notes payable claims last year. There were no changes in the accounts payables during the reporting period. • The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million in long-term assets last year. Income Statement For the Year Ended on December 31 (Millions of dollars) J&H Corp. Net sales Operating costs, except depreciation and amortization Depreciation and amortization Total operating costs Operating income (or EBIT) Less: Interest Earnings before taxes (EBT) Less: Taxes (40%) Net income $1,500 1,200 60 1,260 $240 24 $216 86 $130 Industry Average $1,875 1,500 75 1,575 $300 45 $255 102 $153 Based on the information given to Jeffrey, he submits a report on January 1 with some important calculations for management to use, both for analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply. J&H Corp.'s NOPAT is $144.0 million, which is lower than the industry average of $180.0 million. J&H Corp. has $-$14.0 million of noninterest-bearing current assets net of noninterest-charging liabilities. J&H Corp.'s total net operating capital consists of its net operating working capital and total investment in long-term assets. J&H Corp.'s net operating working capital is $105.0 million. The company has $581.0 million in operating assets and $595.0 million in operating liabilities.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:• Last year, J&H Corp. reported a book value of $700 million in current assets, of which 15% is cash, 17% is short-term investments,
and the rest is accounts receivable and inventory.
• The company reported $595.0 million of current liabilities including accounts payable and accruals. Interestingly, the company had no
notes payable claims last year. There were no changes in the accounts payables during the reporting period.
• The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $1,120 million
in long-term assets last year.
Income Statement For the Year Ended on December 31 (Millions of dollars)
J&H Corp.
$1,500
1,200
60
Net sales
Operating costs, except depreciation and amortization
Depreciation and amortization
Total operating costs
Operating income (or EBIT)
Less: Interest
Earnings before taxes (EBT)
Less: Taxes (40%)
Net income
1,260
$240
24
$216
86
$130
Industry Average
$1,875
1,500
75
1,575
$300
45
$255
102
$153
Based on the information given to Jeffrey, he submits a report on January 1 with some important calculations for management to use, both for
analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply.
J&H Corp.'s NOPAT is $144.0 million, which is lower than the industry average of $180.0 million.
J&H Corp. has $-$14.0 million of noninterest-bearing current assets net of noninterest-charging liabilities.
J&H Corp.'s total net operating capital consists of its net operating working capital and total investment in long-term assets.
J&H Corp.'s net operating working capital is $105.0 million.
The company has $581.0 million in operating assets and $595.0 million in operating liabilities.
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