FUND.ACCT.PRIN.-CONNECT ACCESS
FUND.ACCT.PRIN.-CONNECT ACCESS
25th Edition
ISBN: 9781260780185
Author: Wild
Publisher: MCG
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Chapter 15, Problem 19QS

1)

To determine

Introduction: The return on total assets demonstrates how successfully a business generates profits from its assets. Return on total assets helps the business organizations in determining whether the entity has effectively utilized its assets in relation to its earnings or not.

The return on total assets in the current year and 1 year ago.

2)

To determine

Introduction: The return on total assets demonstrates how successfully a business generates profits from its assets. Return on total assets helps the business organizations in determining whether the entity has effectively utilized its assets in relation to its earnings or not.

The efficiency of the company in utilizing its total assets in the current year.

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Consider the table given below to answer the following question. Year 1 2 3 4 7 9. 10 Asset value 13.00 14.56 16.31 18.26 19.91 21.70 23.65 25.07 26.58 28.17 Earnings 1.56 1.75 1.96 2.19 2.39 2.50 2.60 2.63 2.13 2.25 Net investment 1.56 1.75 1.96 1.64 1.79 1.95 1.42 1.50 1.59 1.69 Free cash flow (FCF) 0.55 0.60 0.54 1.18 1.13 0.53 0.56 Return on equity (ROE) 0.12 0.12 0.12 0.12 0.12 0.115 0.11 0.105 0.08 0.08 Asset growth rate Earnings growth rate 0.12 0.12 0.12 0.09 0.09 0.09 0.06 0.06 0.06 0.06 0.12 0.12 0.12 0.09 0.04 0.04 0.01 -0.19 0.06 Assuming that competition drives down profitability (on existing assets as well as new investment) to 11.5% in year 6, 11% in year 7, 10.5% in year 8, and 8% in year 9 and all later years. What is the value of the concatenator business? Assume 11% cost of capital. (Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places.) X Answer is complete but not entirely correct. Present value 2$ 19.72 X million 6.
Need help calculating: A. Economic value added and B. Return on Capital
This year Last year 1050 Assets Cash 1530 Marketable securities Accounts receivable Inventories Total current assets 1810 1220 2050 1770 2900 2790 8290 6830 Gross fixed assets 29480 28090 Less: Accumulated depreciation 14680 13140 Net fixed assets 14800 14950 Total assets Liabilities and Stockholders' Equity 23090 21780 Accounts payable Notes payable Accruals 1560 1540 2760 2160 190 350 Total current liabilities 4510 4050 Long-term debt Common stock Retained earnings Total stockholders' equity 5220 4970 9950 9950 3410 2810 13360 12760 Total liabilities and stockholders' equity 23090 21780
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