StrikethroughCalculatorScratch PadA shareholder has received the following summarised financial results for Scruff Co for the last year:SmOrdinary shareholders funds25Non-current liabilities6Operating profitFinance charges2Taxation1The industry in which Scruff Co operates has the following average financial performance:Return on equity14%25%Return on capital employedWhich TWO of the following statements are true?Scruff Co's return on capital employed is lower than the industry averageScruff Co's return on equity is higher than the industry averageScruff Co's return on capital employed is higher than the industry averageScruff Co's return on equity is lower than the industry average7

Return on Capital Employed implies how much return has been earned by the firm on its total capital.…

Answered: Scratch Pad A shareholder has received…

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 most recent financial statements for Mandy Company are shown here: Income Statement Balance Sheet $ 11,940 Debt 31,500 Equity Sales Costs Taxable income Taxes (21%) Net income $ 20,100 Current assets 13,800 Fixed assets Internal growth rate $ 6,300 1,323 $ 4,977 Total $ 43,440 % $ 16,420 27,020 Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 45 percent dividend payout ratio. What is the internal growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.) Total $ 43,440
Selected ratios for the current year for three companies in the office furniture industry follow: Office Inspirations Office By Design Ratio Max Office Ltd. Inc. Corporation Dividend Yield 3.1% 2.0% 0.9% Price Earnings 24.6 times 19.7 times 29.2 times Payout Debt to Assets Return on Equity 2.6% 3.4% 1.0% 64% 72% 66% 24.7% 29.7% 25% Based on the above ratios which company has used leverage to increase its return to investors? Max Office Ltd. Office Inspirations Inc. None of the above. Office By Design Corporation.
ssubject :-Accounting
Give typing answer with explanation and conclusion The management of Tarantulagoodies is considering a reduction in the corporation’s debt ratio. The following information is available: Debt: $10,000,000, kd=7.5%, tax-rate=30% Common Stock: $23,000,000, b=1.2, RF=3.5%, E(RM)=10%. The issuance of $5,000,000 in common stock and repurchase of debt in that same amount is expected to result in the reduction in kd to7%. The impact of the action on the cost of equity is to be determined. Should management pursue the change in debt ratio? Why/why not?
Smart Eletro plc, a public listed company, is a major supplier of electrical components to the automotive industry. Company’s key accounting ratios are set out in the following table, together with industry averages: Smart Electro plc. Industry Averages Return on capital employed 21.4% 16.1% Gross profit margin 11.5% 13.0% Net profit margin 9.8% 11.0% Current ratio 1.6 1.4 Inventories turnover 12 6 Trade receivables collection period 61 days 65 days Trade payables payment period 43 days 105 days Gearing 68.4% 37.2% Questions: You are working in this company and the Finance Director asked you to write a report to the Board of Directors. Write a brief report to the board of directors of Smart Eletro plc. comparing the ratios for the company with the industry averages. Identify any areas in which you think they could make improvements. Smart Eletro plc. has operations in…
Financial Accounting C.Mulford: Financial Statement Analysis: 35 Using DuPont Analysis to Compare Corporate Performance Exercise Using Data for Thiokol Corp. and Wyman-Gordon, Inc. Use the data provided below to compare financial performance for the two companies (amounts in millions). Thiokol $ 889.5 Wyman-Gordon $ 499.6 Sales Net income $ 51.4 $ 25.2 Total assets $ 818.3 $ 375.9 Shareholders' equity $ 447.9 $ 109.9 Using DuPont Analysis we see that, Thiokol Corp.: Return on equity Net income Sales Total assets X X Sales Total assets Shareholders' equity Financial leverage. (debt multiplier) Net margin X Asset turnover X (asset multiplier) Return on equity X
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Six Measures of Solvency or Profitability The following data were taken from the financial statements of Loveseth Inc. for the current fiscal year. Property, plant, and equipment (net) $982,500 Liabilities: Current liabilities $131,000 Note payable, 6%, due in 15 years 655,000 Total liabilities $786,000 Stockholders' equity: Preferred $2 stock, $100 par (no change during year) $471,600 Common stock, $10 par (no change during year) 471,600 Retained earnings: Balance, beginning of year $504,000 Net income 254,000 $758,000 Preferred dividends $9,432 Common dividends 119,768 129,200 Balance, end of year 628,800 Total stockholders' equity $1,572,000 Sales $11,035,200 Interest expense $39,300 Assuming that total assets were $2,240,000 at the beginning of the current fiscal year, determine the…
A company's year-end selected financial data is shown below. Year 2 Year 1 Current assets $250,000 $175,000 Total assets 600,000 500,000 Total liabilities 300,000 225,000 Net sales 200,000 150,000 Net income 75,000 60,000 The company's rate of return on assets and rate of return on equity for Year 2 are: a. 12% and 22%, respectively. Ob. 13% and 25%, respectively. Oc. 14% and 26%, respectively. Od. 36% and 25%, respectively.
The most recent financial statements for Mandy Company are shown below: Balance Sheet $ 32,000 Debt 93,200 Equity $ 125,200 Total Income Statement Sales Costs Taxable income Tax (218) Net Income $91,200 Current assets 66,150 Fixed assets $ 25,050 5,261 Total $ 19,789 Sustainable growth rate Assets and costs are proportional to sales. Debt and equity are not. The company maintains a constant 35 percent dividend payout ratio. No external equity financing is possible. What is the sustainable growth rate? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. $ 42,000 83,200 $ 125,200 %

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