EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
17th Edition
ISBN: 9781260464900
Author: BLOCK
Publisher: MCGRAW-HILL LEARNING SOLN.(CC)
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 3, Problem 26P
a.
Summary Introduction
To calculate: The
Introduction:
Return on assets:
It is the financial ratio that shows the profitability of the firm in relation to the usage of resources. It can be computed by dividing a corporation’s net income to its total assets.
b.
Summary Introduction
To determine: The phenomenon that is shown in part (a).
Introduction:
Return on asset:
It is the financial ratio that shows the profitability of the firm in relation to the usage of resources. It can be computed by dividing a corporation’s net income to its total assets.
c.
Summary Introduction
To determine: The effect of increased income on return on assets.
Introduction:
Return on asset:
It is the financial ratio that shows the profitability of the firm in relation to the usage of resources. It can be computed by dividing a corporation’s net income to its total assets.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
In January 2009, the Status Quo Company was formed. Total assets were $593,000, of which $351,000 consisted of depreciable fixed
assets. Status Quo uses straight-line depreciation of $35,100 per year, and in 2009 it estimated its fixed assets to have useful lives of
10 years. Aftertax Income has been $43,000 per year each of the last 10 years. Other assets have not changed since 2009.
a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018
Note: Input your answers as a percent rounded to 2 decimal places.
Year
2009
2011
2014
2016
2019
Return on Assets
%
%
%
%
b. To what do you attribute the phenomenon shown in part a
Increase in current assets
Annual depreciation charges
Increase in market share.
Return on assets will be
4
c. Now assume income increased by 10 percent each year. What effect would this have on your answers to perta?
In January 2009, the Status Quo Company was formed. Total assets were $586,000, of which $377,000 consisted of depreciable fixed
assets. Status Quo uses straight-line depreciation of $37,700 per year, and in 2009 it estimated its fixed assets to have useful lives of
10 years. Aftertax income has been $59,000 per year each of the last 10 years. Other assets have not changed since 2009.
a. Compute return on assets at year-end for 2009, 2011, 2014, 2016 and 2018.
Note: Input your answers as a percent rounded to 2 decimal places.
Year
2009
2011
2014
2016
2019
Return on Assets
%
%
%
%
Complete parts a and c please thank you
Chapter 3 Solutions
EBK FOUNDATIONS OF FINANCIAL MANAGEMENT
Ch. 3 - If we divide users of ratios into short-term...Ch. 3 - Explain how the Du Pont system of analysis breaks...Ch. 3 - If the accounts receivable turnover ratio is...Ch. 3 - Prob. 4DQCh. 3 - Is there any validity in rule-of-thumb ratios for...Ch. 3 - Why is trend analysis helpful in analyzing ratios?...Ch. 3 - Inflation can have significant effects on income...Ch. 3 - What effect will disinflation following a highly...Ch. 3 - Why might disinflation prove favorable to...Ch. 3 - Comparisons of income can be very difficult for...
Ch. 3 - Low Carb Diet Supplement Inc. has two divisions....Ch. 3 - Database Systems is considering expansion into a...Ch. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Dr. Zhivà€go Diagnostics Corp.’s income...Ch. 3 - The Haines Corp. shows the following financial...Ch. 3 - Easter Egg and Poultry Company has $2,000,000 in...Ch. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Baker Oats had an asset turnover of 1.6 times per...Ch. 3 - AllState Trucking Co. has the following ratios...Ch. 3 - Front Beam Lighting Company has the following...Ch. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Jerry Rice and Grain Stores has $4,780,000 in...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Jim Short’s Company makes clothing for schools....Ch. 3 - The balance sheet for Stud Clothiers is shown...Ch. 3 - The Lancaster Corporation’s income statement is...Ch. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 27PCh. 3 - Prob. 28PCh. 3 - The Global Products Corporation has three...Ch. 3 - Prob. 30PCh. 3 - Prob. 31PCh. 3 - Prob. 32PCh. 3 - Prob. 33PCh. 3 - Prob. 34PCh. 3 - The following information is from Harrelson...Ch. 3 - Using the financial statements for the Snider...Ch. 3 - Given the financial statements for Jones...Ch. 3 - Prob. 2WE
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
- On January 1, 2016, the Allegheny Corporation purchased machinery for $115,000. The estimated service life of the machinery is 10 years and the estimated residual value is $5,000. The machine is expected to produce 220,000 units during its life. Required: Calculate depreciation for 2016 and 2017 using each of the following methods. Round all computations to the nearest dollar. 1. Straight line. 2. Sum-of-the-years’-digits. 3. Double-declining balance. 4. One hundred fifty percent declining balance. 5. Units of production (units produced in 2016, 30,000; units produced in 2017, 25,000).arrow_forwardA company report stated that a $140,000 asset purchased 3 years ago has a current MACRS book value that is 57.6% of the asset’s basis. (a) Determine the recovery period used. (b) Determine the depreciation next year using the VDB spreadsheet function.arrow_forward(Analysis of Subsequent Expenditures) The following transactions occurred during 2017. Assume thatdepreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year.Jan. 30 A building that cost $132,000 in 2000 is torn down to make room for a new building. The wrecking contractor was paid $5,100 and was permitted to keep all materials salvaged.Mar. 10 Machinery that was purchased in 2010 for $16,000 is sold for $2,900 cash, f.o.b. purchaser’s plant. Freight of $300 is paid on the saleof this machinery.Mar. 20 A gear breaks on a machine that cost $9,000 in 2009. The gear is replaced at a cost of $2,000. The replacement does not extend theuseful life of the machine but does make the machine more effi cient.May 18 A special base installed for a machine…arrow_forward
- Navigation Inc. acquired an equipment on January 1, 2014 at a cost of $2,200,000 including an estimated residual value of $200,000 and twenty (20) years estimated useful life. The replacement cost of the equipment is $2,400,000 on December 30, 2017. The depreciated replacement cost declined to $1,470,000 after two years. If there is a need to gross up, round off percentage to whole number and to nearest dollar. Questions: 1. What is the carrying amount of the equipment on December 31, 2020?2. What is the balance of the revaluation surplus immediately after revaluation?arrow_forwardThe following transactions occurred during 2025. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $139,920 in 2008 is torn down to make room for a new building. The wrecking contractor was paid $5,406 and was permitted to keep all materials salvaged. Date Machinery that was purchased in 2018 for $16,960 is sold for $3,074 cash, f.o.b. purchaser's plant. Freight of $318 is paid on the sale of this machinery. A gear breaks on a machine that cost $9,540 in 2017. The gear is replaced at a cost of $2,120. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2019 when the…arrow_forwardThe following transactions occurred during 2025. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $155,760 in 2008 is torn down to make room for a new building. The wrecking contractor was paid $6,018 and was permitted to keep all materials salvaged. Machinery that was purchased in 2018 for $18,880 is sold for $3,422 cash, fo.b. purchaser's plant. Freight of $354 is paid on the sale of this machinery. A gear breaks on a machine that cost $10,620 in 2017. The gear is replaced at a cost of $2,360. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2019 when the machine…arrow_forward
- The following transactions occurred during 2025. Assume that depreciation of 10% per year is charged on all machinery and 5% per year on buildings, on a straight-line basis, with no estimated salvage value. Depreciation is charged for a full year on all fixed assets acquired during the year, and no depreciation is charged on fixed assets disposed of during the year. Jan. 30 Mar. 10 Mar. 20 May 18 June 23 A building that cost $137,280 in 2008 is torn down to make room for a new building. The wrecking contractor was paid $5,304 and was permitted to keep all materials salvaged. Date Machinery that was purchased in 2018 for $16,640 is sold for $3,016 cash, f.o.b. purchaser's plant. Freight of $312 is paid on the sale of this machinery. A gear breaks on a machine that cost $9,360 in 2017. The gear is replaced at a cost of $2,080. The replacement does not extend the useful life of the machine but does make the machine more efficient. A special base installed for a machine in 2019 when the…arrow_forwardA company purchased a piece of equipment for $30,000 on January 1, 2015. It estimates a residual value of $4,000 and a useful life of 5 years and it uses the straight-line method of depreciation. On January 1, 2017, management estimates the remaining useful life to be 4 years and the new residual value to be $3,000. What is the new annual depreciation expense as of 2017?arrow_forwardI'm having trouble solving this problem.arrow_forward
- Need correct answer. please fastarrow_forwardThe Nelson Oil company estimated that the oil reserve it acquired in 2016 would produce 4 million barrels of oil. The company extracted 300,000 barrels the first year, 500,000 barrels in 2017, and 600,000 barres in 2018. Nelson paid $32,000,000 for the oil reserve. a. Compute the depletion expenses for each year 2016,2017,2018b. Prepare the journal entries to record I. acquisition of the oil reserve and Ii. The deletion for 2016arrow_forwardOn January 1,2013, a new building was purchased at a cost of $30,000,000. Depreciation was computed on the straight-line basis at 4% per year. On January 1,2016, the building was appraised and was reported to have a fair value of $36,000,000 and an estimated remaining life of 15 years. This was the first revaluation made in the building since acquisition. What is the revaluation surplus recognized in the accounts at January 1,2016?arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Accounting Volume 1AccountingISBN:9781947172685Author:OpenStaxPublisher:OpenStax CollegeCentury 21 Accounting Multicolumn JournalAccountingISBN:9781337679503Author:GilbertsonPublisher:Cengage
Principles of Accounting Volume 1
Accounting
ISBN:9781947172685
Author:OpenStax
Publisher:OpenStax College
Century 21 Accounting Multicolumn Journal
Accounting
ISBN:9781337679503
Author:Gilbertson
Publisher:Cengage
How To Analyze an Income Statement; Author: Daniel Pronk;https://www.youtube.com/watch?v=uVHGgSXtQmE;License: Standard Youtube License