Can someone please tell me if I'm on the right track, and complete the missing cells by completing the forumulas? Thank you. **Understanding Financial Metrics: An Educational Overview**Here we break down key financial calculations for LaundryMate Products using a spreadsheet format. The aim is to calculate Net Operating Profit After Taxes (NOPAT), invested capital, and Return on Investment (ROI).**Sales and Expenses:**- **Sales**: $55,000,000- **Cost of Goods Sold**: $38,400,000- **Selling and Administrative Expenses**: $5,700,000- **Interest Expense**: $1,000,000**Income Calculations:**- **Income Before Taxes**: - Calculated as Sales minus Cost of Goods Sold and Selling & Administrative Expenses ($55,000,000 - $38,400,000 - $5,700,000 = $10,900,000). - Subtract Interest Expense ($10,900,000 - $1,000,000 = $9,900,000).- **Less Income Taxes**: - Income Before Taxes ($9,900,000) multiplied by Income Tax Rate (20%) = $1,980,000.- **Net Income**: - Income Before Taxes minus Income Taxes ($9,900,000 - $1,980,000 = $7,920,000).**Other Financial Information:**- **Total Assets**: $97,000,000- **Non-interest Bearing Current Liabilities**: $3,200,000- **Required Rate of Return on Invested Capital**: 10%**Key Calculations:**1. **NOPAT:** - Formula: NOPAT = Income Before Taxes + (Interest Expense x (1 - Tax Rate)) - Calculation: $9,900,000 + [$1,000,000 x (1 - 0.20)] = $10,700,0002. **Invested Capital:** - Formula: Invested Capital = Total Assets - Noninterest-bearing Current Liabilities - Calculation: $97,000,000 - $3,200,000 = $93,800,0003. **ROI:** - Formula: ROI = NOPAT / Invested Capital - Calculation: $10,700,000 / $93,800,000 = 11.4%**Diagram Explanation:**The spreadsheet lists sales, various expenses, and detailed steps for the N **Analyzing the Disposal of Assets**In this exercise, we consider the implications of disposing of fully depreciated equipment on a company’s Return on Investment (ROI). The example given involves LaundryMate Products, which had $11,000,000 worth of fully depreciated equipment. ### NOPAT Calculation- **NOPAT =** The formula for NOPAT (Net Operating Profit After Tax) is not fully specified, but includes terms for adjustments based on the disposal.### Adjusted Invested Capital- **Adjusted Invested Capital =** This value needs to be recalculated after the disposal of the equipment, which affects the company's invested capital.### New ROI Calculation- **New ROI =** Using the adjusted values of NOPAT and invested capital, the company needs to compute a new ROI figure.### Considerations for Managers**Question:** What incentives might a manager have to dispose of assets?**Discussion:** Managers may have several incentives for disposing of assets:1. **Improving Financial Ratios:** Disposing of fully depreciated assets can improve financial metrics and ratios.2. **Reducing Maintenance Costs:** Older, fully depreciated equipment might incur higher maintenance costs.3. **Freeing Up Capital:** Selling unused equipment can free up capital for more strategic investments.4. **Operational Efficiency:** Streamlining operations by removing outdated or redundant equipment.This exercise helps highlight strategic financial considerations and challenges in asset management and disposal.

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Answered: What incentives might a manager have to…

Business

Accounting

What incentives might a manager have to dispose of assets?

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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