Which of the following calculations is correct if sales are $25,000, operating profit after tax is $1,000, the tax rate is 30%, there are no ‘other comprehensive income’ items, operating liabilities (OL) are $5,000, the short-term borrowing rate (STBC) is 3% after tax, and the asset turnover ratio (ATO) is 2? 1. Operating liability leverage (OLLEV) = 0.286 2. RNOA = 0.092 3. RNOA = 0.066 4. Operating profit margin after tax = 0.046
Which of the following calculations is correct if sales are $25,000, operating profit after tax is $1,000, the tax rate is 30%, there are no ‘other comprehensive income’ items, operating liabilities (OL) are $5,000, the short-term borrowing rate (STBC) is 3% after tax, and the asset turnover ratio (ATO) is 2? 1. Operating liability leverage (OLLEV) = 0.286 2. RNOA = 0.092 3. RNOA = 0.066 4. Operating profit margin after tax = 0.046
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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Which of the following calculations is correct if sales are $25,000, operating profit after tax is $1,000, the tax rate is 30%, there are no ‘other comprehensive income’ items, operating liabilities (OL) are $5,000, the short-term borrowing rate (STBC) is 3% after tax, and the asset turnover ratio (ATO) is 2?
| 1. |
Operating liability leverage (OLLEV) = 0.286 |
|
| 2. |
RNOA = 0.092 |
|
| 3. |
RNOA = 0.066 |
|
| 4. |
Operating profit margin after tax = 0.046 |
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Introduction
VIEWCalculating average operating assets and net operating assets:
VIEWCalculating implicit interest on operating liabilities:
VIEWCalculating return on operating assets (ROOA):
VIEWCalculating operating liability leverage ratio (OLLEV):
VIEWCalculating operating liability leverage spread (OLSPREAD):
VIEWCalculating return on net operating assets (RNOA):
VIEWCalculating operating profit margin after-tax:
VIEWConclusion
VIEW
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