Ques. Assume that a firm has the following data for the year ended 12/31/2019:Sales: $300Depreciation expense: $20Interest expense: $40Tax expense: $40Net worth: $150In addition, the company's net worth in 2018 was $150.Assume that in 2020, sales, cost of goods sold, and S, G, & A expenses remain the same, depreciation expenseincreases, interest expense increases, and tax expense decreases.Which of the following statements is true?1. Gross margin will decrease.II. Operating margin will decrease.III. Net income will increase.IV. Return on beginning equity will increase.• I only•I and II onlyI, II and III onlyI, II, III, and IV

Net income is calculated as shown below.

Sales: $300 Depreciation expense: $20 Interest expense: $40 Tax expense: $40 Net worth: $150 2 In addition, the company's net worth in 2018 was $150. Assume that in 2020, sales, cost of goods sold, and S, G, & A expenses remain the same, depreciation expens increases, interest expense increases, and tax expense decreases. Which of the following statements is true?

Sales: $300 Depreciation expense: $20 Interest expense: $40 Tax expense: $40 Net worth: $150 2 In addition, the company's net worth in 2018 was $150. Assume that in 2020, sales, cost of goods sold, and S, G, & A expenses remain the same, depreciation expens increases, interest expense increases, and tax expense decreases. Which of the following statements is true?

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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Abbreviated financial statements for Archimedes Levers are shown in the table below. Assume sales and expenses increase by 14% in 2022 and all assets and liabilities increase correspondingly. Income Statement Sales Costs, including interest Net income Net assets Total $ 4,800 3,900 $ 900 Balance Sheet, Year-End 2021 2020 $ 3,936 $3,500 $ 3,936 $3,500 Debt Equity Total 2021 $ 1,536 2,400 $ 3,936 2020 $1,433 2,067 $3,500 a. If the payout ratio is set at 50% and no external debt or equity is to be issued, what is the maximum possible growth rate for Archimedes? b. If the payout ratio is set at 50% and the firm aintains a fixed debt ratio but issues no equity, what is the maximum possible growth rate for Archimedes? Note: For all requirements, do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places.
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