Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
10th Edition
ISBN: 9780077835422
Author: Zvi Bodie Professor, Alex Kane, Alan J. Marcus Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem 2CP
Which of the following best explains a ratio of “net sales to average net fixed assets” that exceeds the industry average?
a. The firm added to its plant and equipment in the past few Years.
b. The firm makes less efficient use of its assets than other firms.
c. The firm has a lot of old plant and equipment.
d. The firm uses straight-line
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
Western Gas & Electric Co. (WG&E) had sales of $1,550,000 last year on fixed assets of $270,000. Given that WG&E’s fixed assets were being used at only 94% of capacity, then the firm’s fixed asset turnover ratio was?
How much sales could Western Gas & Electric Co. (WG&E) have supported with its current level of fixed assets?
When you consider that WG&E’s fixed assets were being underused, what should be the firm’s target fixed assets to sales ratio?
Suppose WG&E is forecasting sales growth of 22% for this year. If existing and new fixed assets are used at 100% capacity, the firm’s expected fixed assets turnover ratio for this year is?
I am struggling to figure out what I am doing wrong to correctly answer 7.
Chapter 14 Solutions
Essentials of Investments (The Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 14 - Prob. 2PSCh. 14 - The Crusty Pie Co., which specializes in apple...Ch. 14 - The ABC Corporation has a profit margin on sales...Ch. 14 - A company’s current ratio is 2. If the company...Ch. 14 - Cash flow from investing activities excludes:...Ch. 14 - Cash flow from operating activities includes:...Ch. 14 - Prob. 8PSCh. 14 - Prob. 9PSCh. 14 - Prob. 10PSCh. 14 - Prob. 11PS
Ch. 14 - Use the DuPont system and the following data to...Ch. 14 - A firm has an ROE of 3 , a debt/equity ratio of...Ch. 14 - A firm has a tax burden ratio of 0.75 , a leverage...Ch. 14 - A11 analyst gathers the following information...Ch. 14 - Here are data On two Firms: LO142 Equity ($...Ch. 14 - Prob. 1CPCh. 14 - Which of the following best explains a ratio of...Ch. 14 - Prob. 3CPCh. 14 - Prob. 4CPCh. 14 - 5. Janet Ludlow is a recently hired analyst. After...Ch. 14 - Prob. 6CPCh. 14 - Prob. 7CPCh. 14 - Go to finance.yahoo.com to find information about...Ch. 14 - Answer the following questions for these two toy...Ch. 14 - Prob. 3WM
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- JC Goods, Inc. has a profit margin of 10% and a total assets turnover of 0.30. The president believes that the existing return on assets might be quadrupled and is dissatisfied with it. One way to do this is by raising the profit margin to 15%, and another is by raising the total assets turnover.What new asset turnover ratio is necessary to double the return on assets in addition to the 15% profit margin? a. 35%b. 45%c. 40%d. 50%arrow_forwardA firm has a higher asset turnover ratio than the industry average, which implies the firm has a higher P/E ratio than other firms in the industry. the firm is more likely to avoid insolvency in the short run than other firms in the industry. the firm is more profitable than other firms in the industry. the firm is utilizing assets more efficiently than other firms in the industry. the firm has higher spending on new fixed assets than other firms in the industry.arrow_forwardA firm with a below industry net profit margin can improve its return on total assets by: a. increasing its current ratio c. decreasing its fixed asset turnover b. decreasing its total asset turnover d. increasing its total asset turnoverarrow_forward
- Company A has a higher Asset Turnover than Company B. Which of the following statements is true regarding these two companies? Company A has higher sales than Company B. Company A is more efficient in using its assets to produce sales than Company B. Company A has fewer assets than Company B.arrow_forwardJC Goods, Inc. has a total assets turnover of 0.30 and a profit margin of 10percent. The president is unhappy with the current return on assets, and he thinks it could be doubled. This could be accomplished (1) by increasing the profit margin to 15 percent and (2) by increasing the total assets turnover.What new asset turnover ratio, along with the 15 percent profit margin, isrequired to double the return on assets?a. 35%b. 45%c. 40%d. 50%arrow_forwardA company has a net EBIT of EUR1bn and has a capital employed (CE) of 10bn EUR. The weighted average cost of capital (WACC) is 12%. Define whether this creates or destroys value. Determine the amount of value created or destroyed. How would you explain to the managers of this company that generates EUR1bn of net EBIT that they are destroying value. What are the driver for this company to create value?. Give answer to all partsarrow_forward
- N9. Accountarrow_forwardSaddie & Co.'s return on assets (ROA) for the current year was 6.23%. Which of the following is true if Saddie & Co. wishes to increase their ROA? The company should decrease asset turnover. O The company should increase the selling price of its goods or services. The company should increase the cost of its products. The company should increase the amount of assets it has.arrow_forwardIs a total asset turnover of 1.56 good or bad. The initial analysis should include the following: The ratio equation Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income. Then explain whether this is a good result or a result that needs improving. The original post should include at least three (3) sentences but no more than seven (7) sentences.arrow_forward
- please see atteched filearrow_forwardTotal asset turnover has increased at the O’Neil Company since last year. This increasemust mean thata. the company has become more efficient.b. the company has become more effective and more efficient.c. the company has become more effective.d. the company has become neither more effective nor more efficient.arrow_forwardIdentify whether the statement is True or False. Replacement value is an estimate of the cost of reproducing, creating, developing, or manufacturing a similar asset. * The replacement value method is superior to book value as it gives an indication of the true value of the firm as of the valuation date. * Borrowings that are contracted to be paid after 24 months are classified as current liabilities. * Brownfield investment is the term used to describe businesses that are starting from scratch. * Replacement cost is the cost of similar assets that have the nearest equivalent value as of the valuation date. * An asset has been defined by the industry as transactions that would yield future economic benefits as a result of past transactions. * Equipment is classified as non-current assets. *arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Accounting: Reporting And AnalysisAccountingISBN:9781337788281Author:James M. Wahlen, Jefferson P. Jones, Donald PagachPublisher:Cengage Learning
Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:9781337788281
Author:James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax College
Financial Planning & Forecasting - Spreadsheet Modeling; Author: Pat Obi;https://www.youtube.com/watch?v=dn8vTk0eaBg;License: Standard Youtube License