3. Measuring Performance. Here are simplified financial statements for Watervan Corporation:INCOME STATEMENT(Figures in $ millions)Net sales881Cost of goods soldDepreciationEarnings before interest and taxes (EBIT)74131109Interest expense12Income before tax97Taxes34Net income63BALANCE SHEET(Figures in $ millions)End of YearStart of YearAssetsCurrent assets369312Long-term assets258222Total assets627534Liabilities and shareholders' equityCurrent liabilities194157121Long-term debtShareholders' equityTotal liabilities and shareholders' equity108325256627534The company's cost of capital is 8.5%. (LO4-2)a. Calculate Watervan's economic value added (EVA).D. What is the company's return on capital? (Use start-of-year rather than average capital.)C. What is its return on equity? (Use start-of-year rather than average equity.)

Economic value added is a measure of a company's financial performance. It is an estimated economic…

tervan INCOME STATEMENT (Figures in $ millions) Net sales 881 Cost of goods sold Depreciation Earnings before interest and taxes (EBIT) Interest expense 741 31 109 12 Income before tax 97 Taxes 34 Net income 63

tervan INCOME STATEMENT (Figures in $ millions) Net sales 881 Cost of goods sold Depreciation Earnings before interest and taxes (EBIT) Interest expense 741 31 109 12 Income before tax 97 Taxes 34 Net income 63

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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Question

3. Measuring Performance. Here are simplified financial statements for Watervan Corporation:
INCOME STATEMENT
(Figures in $ millions)
Net sales
881
Cost of goods sold
Depreciation
Earnings before interest and taxes (EBIT)
741
31
109
Interest expense
12
Income before tax
97
Taxes
34
Net income
63
BALANCE SHEET
(Figures in $ millions)
End of Year
Start of Year
Assets
Current assets
369
312
Long-term assets
258
222
Total assets
627
534
Liabilities and shareholders' equity
Current liabilities
194
157
121
Long-term debt
Shareholders' equity
Total liabilities and shareholders' equity
108
325
256
627
534
The company's cost of capital is 8.5%. (LO4-2)
a. Calculate Watervan's economic value added (EVA).
D. What is the company's return on capital? (Use start-of-year rather than average capital.)
C. What is its return on equity? (Use start-of-year rather than average equity.)

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Based on the table given below, Net Income Model Data 1 B Sales Cost of Goods Sold $10.000.000 6400.000 Administrative Expenses 500,000 Selling Expenses 5.900.000 Depreciation Expenses 250.000 10 Interest Expenses 20000 11 Taxes $620,000 12 13 Model 14 15 Kiss Profi 1,000,000 16 Operating Expenses 52.110.000 19 Net Operating Inome 1.450.000 arnings Before Tenes 1350.000 19 20 Net Income which of the following formulas would be used to calculate the net income value using only the information in the Model, and not in the Data section?. -B6-B15 -B15-B16-B17+B18 -B5-B17 -B18-B11
Accounts payable 919 Accounts receivable 631 Accumulated depreciation 1,813 Cash 729 Common stock 1,387 Cost of goods sold 7,578 Current portion of long-term debt 24 Depreciation expense 108 Dividends 13 Goodwill and other long-term assets 2,627 Income tax expense 24 Income taxes payable 12 Interest expense 54 Interest revenue 11 Inventories 930 Long-term liabilities 1,585 Prepaid expenses and other current assets 65 Property and equipment 2,389 Retained earnings 825 Sales 9,710 Selling, general, and administrative expenses 2,276 Unearned revenue 990 Wages payable 148 Prepare the balance sheet.
Using the following information, what is the amount of net income? Purchases $25,987 Selling expenses $693 Merchandise inventory, September 1 7,575 Merchandise inventory, September 30 8,525 Administrative expenses 955 Sales 50,914 Rent revenue 1,194 Interest expense 848 a.$17,000b.$26,271c.$24,575d.$33,100
Part B: Financial Planning - Pro Forma Statements 1. Using the financial statements for 2009 as your 'base', assume that Luxio's sales are 20% higher for 2010. Use this projection to prepare the pro forma statements following the requirements listed below. Assume the change in sales is permanent. 2. For the Income Statement: • Cost of Goods Sold rate is expected to remain constant; o 'Depreciation' and 'Interest paid' expenses are expected not to change; o The Tax rate is expected to decrease to 32%; and • Management is expected to increase the amount of dividends paid by 5% (therefore, the Dividend payout rate will increase by 5%). 3. For the Balance Sheet: o 'Current assets' change in direct proportion to sales; • 'Fixed assets' are being operated at 100% of capacity; • 'Accounts payable' changes in direct proportion to sales; o 'Notes payable' and 'Other' current liabilities do not change; • 'Common stock' remains unchanged; and • Use 'Long-term debt' as the plug variable. 4.…
Current assets Cash Accounts receivable Inventory Prepaid expenses Total current assets Current liabilities Accounts payable Salaries payable Income tax payable Total current liabilities (a1) a. $8,600 Current ratio 12,900 b. Quick ratio 145,000 5,200 $171,700 $53,300 3,600 1,000 $57,900 2024 $30,100 10,300 :1 105,000 $152,300 :1 6,900 $40,400 5,000 1,000 $46,400 $27,100 7,700 100,000 During 2024, credit sales and cost of goods sold were $138,040 and $82,500, respectively. The 2023 and 2022 credit sales were $151,200 and $151,840, respectively, and the cost of goods sold for the same periods were $79,950 and $82,325, respectively. The accounts receivable and inventory balances at the end of 2021 were $6,900 and $85,000, respectively. 5,600 $140,400 Using the above data, calculate the following ratios: (Round receivables turnover ratio and average collection period to 1 decimal place, e.g. 15.2, days to sell inventory to 0 decimal places, e.g. 152 and all other answers to 2 decimal…
A1
Using the following information, what is the amount of net income? Purchases $ 25,599 Selling expenses $ 838 Merchandise inventory, September 1 6,382 Merchandise inventory, September 30 11,356 Administrative expenses 765 Sales 47,294 Rent revenue 908 Interest expense 1,144 O a. $27,118 Ob. $24,830 Oc. S18,448 Od. S36,186
Ee 07.

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