This problem continues the Piedmont Computer Company situation from Chapter 23. Piedmont Computer Company reported 2020 sales of $3,600,000 and operating income of $183,600. Average total assets during 2020 were $600,000. Piedmont Computer Company’s target
Calculate Piedmont Computer Company’s profit margin ratio, asset turnover ratio,
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- Compute the Revenue Effect- Growth Component, indicate if favorable/(unfavorable).arrow_forwardThe table given below summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. Income Statement $ in thousands Sales $ 2,600 (40% of average assets)a Costs 1,950 (75% of sales) Interest 105 (5% of debt at start of year)b Pretax profit 545 Tax 218 (40% of pretax profit) Net income $ 327 aAssets at the end of 2018 were $6,240,000. bDebt at the end of 2018 was $2,100,000. Balance Sheet $ in thousands Net assets $ 6,760 Debt $ 2,100 Equity 4,660 Total $ 6,760 Total $ 6,760 a. What is the implied level of assets at the end of 2020? (Enter your answer in dollars not in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake need…arrow_forwardMVV has the following data on its 2020 financial statement Total sales 2,000,000 Profit 360,000 Beginning total sales Ending total sales 1,500,000 2,100,000 What is the Return on Investment (ROI) of the MVV?arrow_forward
- Suppose a firm has had the following historic sales figures. What would be the forecast for next year's sales using the average approach? You must use the built-in Excel function to answer this question. Input area: Year Sales 2016 2017 2018 es es e $ 1,500,000 $ 1,750,000 $ 1,400,000 2019 $ 2,000,000 2020 $ 1,600,000 Output area: Next year's salesarrow_forwardA. Wally asks you to create an Income Statement for 2020 using the information below. 1. 2020 sales were 150% of last year’s sales2. Gross profit margin was 55%3. Operating profit margins were 15% 4. Interest expense fell to 7%, given a change in interest rates 5. The tax rate was 30% B. Based on the change in Income between 2020 and 2019, how would you say AndrewCo is doing?arrow_forward3. Based on Gideon’s required rate of return of 8%, what was the property/casualtydivision’s residual income for 2019?arrow_forward
- The following tables summarizes the 2019 income statement and end-year balance sheet of Drake's Bowling Alleys. Drake's financial manager forecasts a 20% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.50. Interest is forecasted at 4% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) $2,050 (50% of average assets)ª 1,230 (60% of sales) Sales a Costs b Interest 26 (4% of debt at start of year) Pretax profit $ 794 238 (30% of pretax profit) $ Таx Net income 556 a Assets at the end of 2018 were $4,000,000. Debt at the end of 2018 was $660,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) $ 4,200 Debt $ 3,540 Assets 660 Equity Total $4,200 $4,200 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake's need to raise in the capital markets…arrow_forwardThe following tables summarizes the 2019 income statement and end-year balance sheet of Drake's Bowling Alleys. Drake's financial manager forecasts a 15% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.50. Interest is forecasted at 3% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) $2,100 (50% of average assets)ª 1,050 (50% of sales) Sales a Costs Interest 20 (3% of debt at start of year)º Pretax profit $1,030 206 (20% of pretax profit) $ Таx Net income 824 a Assets at the end of 2018 were $4,100,000. Debt at the end of 2018 was $670,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) $ 4,300 $ 3,630 Assets Debt 670 Equity Total $4,300 $4,300 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake's need to raise in the capital markets…arrow_forwardSubject :- Accountingarrow_forward
- For fiscal year 2021, Costco Wholesale Corporation ( COST) had a net profit margin of 2.60%, asset turnover of 3.24, and a book equity multiplier of 3.28. a. Use this data to compute Costco's ROE using the DuPont Identity. b. If Costco's managers wanted to increase its ROE by 1.10 percentage points, how much higher would their new asset turnover need to be? c. If Costco's net profit margin fell by 1.10 percentage points, by how much would their asset turnover need to increase to maintain their ROE? a. Use this data to compute Costco's ROE using the DuPont Identity. Costco's ROE is %. (Round to two decimal places.) If Costco's net profit margin fell by 1.05 percentage points, by how much would their asset turnover need to increase to maintain their ROE?arrow_forwardA company has the following items for the fiscal year 2020: Revenue =10 million Cost of goods sold = 3 million EBITDA = 5 million EBIT = 4 million Net income = 2 million Calculate the company’s net profit margin Write the formula for the following ratios and what each ratio measures: Current Ratio Quick Ratioarrow_forwardFor the year ended December 31, 2019, Settles Inc. earned an ROI of 9.6%. Sales for the year were $16 million, and average asset turnover was 2.4. Average stockholders' equity was $3.2 million.Required: Calculate Settles Inc.'s margin and net income. (Round "Margin" answer to 1 decimal place. Enter the net income answer in dollars, i.e., $5 million should be entered as 5,000,000.) Calculate Settles Inc.'s return on equity. (Round your answer to 1 decimal place.)arrow_forward
- Principles of Accounting Volume 2AccountingISBN:9781947172609Author:OpenStaxPublisher:OpenStax CollegeEBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENT