I want to this question answer general accounting Westin Manufacturing has $8,400,000 in assets, structured as follows:Asset TypeAmountTemporary current assets $3,600,000Permanent current assets $2,800,000||Fixed assets$2,000,000Total assets$8,400,000The company follows a matching approach to financing, where long-term financing is perfectlymatched with long-term asset needs, and short-term financing is matched with temporary currentassets. The current interest rate environment shows short-term rates at 10% and long-term rates at7.5%. Earnings before interest and taxes (EBIT) are $1,750,000. The tax rate is 35%.Calculate Westin Manufacturing's earnings after taxes.

Step 1: Define Earnings After Taxes (EAT)Earnings After Taxes (EAT) represent the net income a…

Answered: Westin Manufacturing has $8,400,000 in…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter13: Capital Structure Concepts

Section: Chapter Questions

Problem 5P

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You are provided with the following information on Kayray Corporation. Your ultimate objective is to calculate the EVA for the firm. LIFO reserve 60 Net plant, property, and equipment 1,325 Other assets 30 Goodwill 325 Accumulated Goodwill amortized 65 PV of Operating leases 140 Tax benefit from interest on expenses 10 Tax benefit from interest on leases 5 Taxes on non-operating income 2 Implied interest on op. lease 9.5 Increase in LIFO reserve 12 Goodwill amortization 15 Operating profit 550 Income tax expense 215 Net working capital 440 WACC 0.12 Refer to Exhibit 9.15. Calculate the adjusted operating profits before taxes. a. $586.5 b. $225.64 c. $825.23 d. $692.5 e. $831.56
Suppose a firm has the following information: Operatingcurrent assets = $2.7 million; operating current liabilities =$1.5 million; long-term bonds = $3 million; net plant andequipment = $7.8 million; and other long-term operating assets =$1 million. How much is tied up in net operating workingcapital (NOWC)? ($1.2 million) How much is tied up in total netoperating capital? ($10 million)
The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111 - 1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, It needs $1,250 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is $565-225= $340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current sales are $805,500 and sales are projected to grow to $940,000. The current fixed assets are $775,000. How much in new fixed assets is required to support this growth in sales? (Do not round…
Selected data from an investment center of IROL Inc. follow:Sales $8,000,000Net book value of assets, beginning 2,500,000Net book value of assets, ending 2,600,000Net operating income 640,000Minimum rate of return 12%Required1. Calculate return on sales (ROS), asset turnover (AT), and return on investment (ROI).2. Calculate residual income (RI).
Subject: accounting
Given the following data:
Finally, management would use the target fixed assets ratio with the projected sales to calculate the firm's required level of fixed assets as follows: Required level of fixed assets = (Target fixed assets/Sales) × Projected sales Mitchell Manufacturing Company has $1,000,000,000 in sales and $230,000,000 in fixed assets. Currently, the company's fixed assets are operating at 75% of capacity. What level of sales could Mitchell have obtained if it had been operating at full capacity? Do not round intermediate calculations. Round your answer to the nearest dollar.$ What is Mitchell's Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to two decimal places. % If Mitchell's sales increase by 50%, how large of an increase in fixed assets will the company need to meet its Target fixed assets/Sales ratio? Do not round intermediate calculations. Round your answer to the nearest dollar.$
The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 = $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital Intensity ratio= Fixed assets/Full-capacity sales = $1,800/$1,111 - 1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, It needs $1,250 × 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 In fixed assets. So, EFN is $565-225 = $340. Blue Sky Manufacturing, Incorporated, is currently operating at 90 percent of fixed asset capacity. Current sales are $805,500 and sales are projected to grow to $940,000. The current fixed assets are $775,000. How much in new fixed assets is required to support this growth in…
The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 = $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111 = 1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, it needs $1,250 × 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is $565 – 225 = $340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current sales are $712,000 and sales are projected to grow to $930,000. The current fixed assets are $686,000. How much in new fixed assets is required…
Normandy Instruments invests heavily in research and development (R&D), although it must currently treat its R&D expenditures as expenses for financial accounting purposes. To encourage Investment in R&D, Normandy evaluates its division managers using EVA The company adjusts accounting income for R&D expenditures by assuming these expenditures create assets with a two-year life. That is, the R&D expenditures are capitalized and then amortized over two years. Aerospace Division of Normandy shows after-tax income of $18.006 million for year 2. R&D expenditures in year 1 amounted to $7.206 million and in year 2, R&D expenditures were $12.006 million. For purposes of computing EVA, Normandy assumes all R&D expenditures are made uniformly over the year. Before adjusting for R&D, Aerospace Division shows assets of $72.006 million at the beginning of year 2 and current liabilities of $1,506,000. Normandy computes EVA using divisional investment at the beginning of the year and a 12 percent…
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