CFIN -STUDENT EDITION-ACCESS >CUSTOM<
6th Edition
ISBN: 9780357752951
Author: BESLEY
Publisher: CENGAGE C
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Chapter 7, Problem 19PROB
Summary Introduction
The company had a net income of $65,000, interest expense of $40,000 and a marginal tax rate of 35%. Invested capital was $800,000 and average cost of the fund is 12%.
Economic Value Added (EVA) is based on a technique that the earnings generated by the company should be enough to meet the investors funds. Any amount greater than the cost to investors would add to the company’s value. EVA can be calculated using the below equation:
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Use the following information to answer this question:
Net sales
Windswept, Incorporated
2024 Income Statement
Cost of goods sold
Depreciation
($ in millions)
Earnings before interest and taxes
Interest paid
Taxable income
Taxes
Net income
$ 14,150
8,150
515
$ 5,485
108
$ 5,377
1,129
$ 4,248
Windswept, Incorporated
2023 and 2024 Balance Sheets
($ in millions)
2023
2024
2023
2024
Cash
Accounts received
$ 300
$ 330
Accounts payable
$ 1,980
$1,955
1,190
1,090
Long-term debt
1,110
1,430
Inventory
2,120
1,795
Common stock
3,440
3,080
Total
$ 3,610
$ 3,215
Retained earnings
690
940
Net fixed assets
3,610
Total assets
$ 7,220
4,190
$ 7,405
Total liabilities & equity
$ 7,220
$ 7,405
What is the fixed asset turnover for 2024?
Chapter 7 Solutions
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