Total asset turnover, net profit, equity multiplier and return on equity .

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Answer 1

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Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

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Dynamic Energy Wares (DEW) has decided to change the manner in which it distributes its products to large companies. The change in the distribution system comes at a time when DEW’s profits are declining. The declining profits might not be the sole reason for the change, but it appears to be the primary impetus for the decision. It also appears that the new policy requiring DEW’s distributors to increase inventory levels before the end of the fiscal year will artificially inflate DEW’s sales for the current year. However, DEW’s new policy does not require the distributors to pay for any increased inventory until next year (six months), and any unsold inventory can be returned after nine months. So, if the demand for DEW’s products actually is decreasing, the impact will appear on next year’s financial statements. If the financial manager actually intends to artificially inflate DEW’s profits this year, she must realize that such actions eventually will “catch up” with her. Discussion…

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Answer 2

Question

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

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Answer 3

Question

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

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Answer 4

Question

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

Expert Solution & Answer

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Answer 5

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

Answer 6

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

Answer 7

Chapter 3, Problem 5P

a)

Summary Introduction

To determine: Total asset turnover, net profit, equity multiplier and return on equity.

Answer 8

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

Answer 9

b)

Summary Introduction

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

Answer 10

Expert Solution & Answer

Answer 11

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Answer 12

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Answer 13

Ch. 3 - Prob. 1QTD Ch. 3 - Prob. 2QTD Ch. 3 - Prob. 3QTD Ch. 3 - Prob. 4QTD Ch. 3 - Prob. 5QTD Ch. 3 - Prob. 6QTD Ch. 3 - Prob. 7QTD Ch. 3 - Prob. 8QTD Ch. 3 - Prob. 9QTD Ch. 3 - Prob. 10QTD

Total asset turnover, net profit, equity multiplier and return on equity .

Solution Summary: The author explains how firms A and D have the highest return on equity at 30%, while firm D (with same ROE) has lower profit margin and lower turnover.

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To determine: Total asset turnover, net profit, equity multiplier and return on equity.

To Identify: Poorer performing firm and discuss the corrective actions taken by person X to control and discuss the additional data required by person X on hand when conducting his analyses.

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Chapter 3 Solutions