Problem 3. Cherilyn Company's sales last year were P415,000, and its year-end total assets were P355,000. The average firm in the industry has a total assets turnover ratio of 2.4. Cherilyn's new CFO believes the company has excess assets that can be sold so as to bring the total assets turnover ratio down to the industry average without affecting sales. By how much must the assets be reduced to bring the total assets turnover ratio to the industry average, holding sales constant?

Problem 3. Cherilyn Company's sales last year were P415,000, and its year-end total assets were P355,000. The average firm in the industry has a total assets turnover ratio of 2.4. Cherilyn's new CFO believes the company has excess assets that can be sold so as to bring the total assets turnover ratio down to the industry average without affecting sales. By how much must the assets be reduced to bring the total assets turnover ratio to the industry average, holding sales constant?

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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The Besnier Company had $430 million of sales last year, and it had $75 million of fixed assets that were being operated at 80% of capacity. In millions, how large could sales have been if the company had operated at full capacity? Select the correct answer. a. $531.7 b. $537.5 c. $543.3 d. $554.9 e. $549.1
I just need d) answered. A, B,and C have been answered.
(Related to Checkpoint 4.3) (Profitability analysis) Last year the P. M. Postem Corporation had sales of $405,000, with a cost of goods sold of $112,000. The firm's operating expenses were $125,000, and its increase in retained earnings was $76,440. There are currently 21,000 shares of common stock outstanding, the firm pays a $1.56 dividend per share, and the firm has no interest-bearing debt. a. Assuming the firm's earnings are taxed at 35 percent, construct the firm's income statement. b. Compute the firm's operating profit margin. a. Assuming the firm's earnings are taxed at 35%, construct the firm's income statement. Complete the income statement below: (Round to the nearest dollar.) Income Statement Revenues Cost of Goods Sold Gross Profit Operating Expenses Net Operating Income Interest Expense Earnings before Taxes Income Taxes Net Income GA SA ...
Last year, Mason Inc. had a total assets turnover of 1.35 and an equity multiplier of 1.50. Its sales were $185,000, and its net income was $10,549. The CFO believes that the company could have operated more efficiently, lowered its costs, and increased its net income by $5,250 without changing its sales, assets, or capital structure. Had it cut costs and increased its net income in this amount, by how much would the ROE have changed? ROE before cost savings: ___________%.? ROE after cost savings: ___________ %.? Improvement in ROE: ____________%?
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Which of the following statements is TRUE? When EBIT and total assets both increase by 25%, the basic earnings power will also increase O a. An increase in the quick ratio over time means that the company's liquidity position is improving. O b. approximately by 25%. A lower than the industry's average inventory turnover ratio means that the company turns over or sells O C. and replaces its inventory more times per year. A higher than industry average P/E ratio indicates the company's stock must be overvalued. d.
Mm. 130.
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Solano Company has sales of $520,000, cost of goods sold of $380,000, other operating expenses of $51,000, average invested assets of $1,650,000, and a hurdle rate of 8 percent. Several possible changes that Solano could face in the upcoming year follow. Determine each scenario’s impact on Solano’s ROI and residual income. (Note: Treat each scenario independently.)a. Company sales and cost of goods sold increase by 40 percent. What is the residual income? Thanks