Martha's Enterprises spent $2,400 to purchaseequipment three years ago. This equipment is currentlyvalued at $1,800 on today's balance sheet but couldactually be sold for $2,000. Net working capital is $200and long-term debt is $800. Assuming the equipment isthe firm's only fixed asset, what is the book value ofshareholders' equity?The following amounts were reported by thetwo companies:Raiden Inc. Nash CompanyNet Income$42,000$55,000Total Assets$75,000$94,000Total Liabilities $40,000$60,000Total Revenues $120,000$137,500Required:1.Calculate each company's net profit marginexpressed as a percent.2.Which company has generated a greaterreturn of profit from each revenue dollar?State the basis for your answer.

Part 1: Book Value of Shareholders' Equity for Martha's Enterprises Given:Equipment Purchase Price:…

Answered: Martha's Enterprises spent $2,400 to…

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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Provided that Shareholders' equity in a firm is $500. The firm owes a total of $400 of which 75 percent is payable this year. In addition credit sales to customers total 5000 of which 80 percent is due this year The firm has net fixed assets of $600. What is the amount of the net working capital?
The market value of the equity of Thompson, Inc., is $582,000. The balance sheet shows $21,000 in cash and $192,000 in debt, while the income statement has EBIT of $93,000 and a total of $137,000 in depreciation and amortization. What is the enterprise value-EBITDA multiple for this company?
For the year just ended, Alpha Construction Services, Inc. started the year with net fixed assets of $625,000. The firm has Net Working Capital of $56,680. The company has a Total Debt Ratio of .45. The company took $125,000 in depreciation expense during the year. If the firm did not acquire any new assets nor dispose of any old fixed assets during the year, what amount in net fixed assets will the firm report at year-end?
Provide the Correct answer
1. In its most recent year, HiFlyer Plc’s return on capital was 50% on the reported invested capital of $2 billion. An analyst decides to treat Research and Development expenditure as capital expenditure and estimates the value of the research asset to be $1 billion. The Research and Development expenditure was $300 million and the amortisation of the research asset was $200 million. There is no tax. a. Re-estimate the return on capital of HiFlyer.
Bunny Hip and Hop Brewery has $1,710,000 in assets and $661,000 of debt. It reports net income of $102,000 a. What is its ROA? (Do not round intermediate calculations, Round the final answer to 2 decimal places.) Return on assets b. What is the return on shareholders' equity? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Return on equity c. If the firm has an asset turnover ratio of 18 times, what is the profit margin? (Round the final answer to 2 decimal places) Profit margin
Here are book- and market-value balance sheets of the United Frypan Company (figures in $ millions): Book-Value Balance Sheet $ 35 65 $ 100 Net working capital Long-term assets Market-Value Net working capital Long-term assets Balance $ 35 190 $225 Debt Equity Sheet Debt a. PV tax shield b. WACC c. New value of the firm Equity $ 40 60 $ 100 Assume that MM's theory holds except for taxes. There is no growth, and the $40 of debt is expected to be permanent. Assume a 21% corporate tax rate. $ 40 185 $ 225 a. How much of the firm's value is accounted for by the debt-generated tax shield? Note: Enter your answer In million rounded to 2 decimal places. b. What is United Frypan's after-tax WACC if "Debt = 6.9% and Equity = 16.1% ? Note: Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. c. Now suppose that Congress passes a law that eliminates the deductibility of interest for tax purposes after a grace period of 5 years. What will be the new…
Understanding the income statement) If the Reid Company earned $500,000 in net income, spent $100,000 in cost of goods sold, had $55,000 of general and administrative expenses, $45,000 in interest expense, $30,000 in depreciation expenses, and $50,000 in taxes, what was the company's sales revenue? 3-2. (Computing earnings per share) If Raines Company earned $280,000 in net income, and paid cash dividends of $40,000, what are Raines's earnings per share if it has 80, 000 shares outstanding? 3-3. (Preparing an income statement) Prepare an income statement and a common - sized income statement from the following information. Sales $525, 000 Cost of goods sold 200,000 General and administrative expenses 62,000 Depreciation expenses 8,000 Interest expense 12,000 Income taxes 97,200
Let It Be, Inc. has shareholders' equity of $150,800. The firm owes a total of $144,000 of which 40 percent are current liabilities. The firm net fixed assets of $190,600. What is the amount of the net working capital?
Alpha Corporation currently has Inventory of $6,100, Equipment of $9,800, Supplies of $4,500, and Land of $11,000. Assuming Alpha has no other assets, what is the company's total current assets? O $37,900 O $10,600 $20,800 O $17,100
Anfield Ltd is a privately-owned trading company that operates a number of sports clothing and equipment stores in the North of England. The latest set of financial statements shows that it had a turnover of £5 million, with net assets of £6m (including a cash balance of £1m). The company is 100% owned by two brothers (each owning 50% of the ordinary share capital). The Directors are considering the need for a new central warehouse, and have been told that this would cost £3m in total to get it up and running. Advise the directors of Anfield Limited on the following: a）How to assess whether the project would be financially viable, and if the decision is made to go ahead, how the project would be financially managed and monitored b）How to fund the expansion

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