The Cardstock Manufacturing Division of the Pulp Paper Company reported the following results from the past year. Shareholders require a return of 5%. Management calculated a weighted-average cost of capital (WACC) of 2%. The company's corporate tax rate is 25%. Sales Operating income Total assets Current liabilities What is the division's sales margin? OA. 81.82% OB. 12.27% OC. 72.73% OD. 15% $900,000 135,000 $1,100,000 800,000

The Cardstock Manufacturing Division of the Pulp Paper Company reported the following results from the past year. Shareholders require a return of 5%. Management calculated a weighted-average cost of capital (WACC) of 2%. The company's corporate tax rate is 25%. Sales Operating income Total assets Current liabilities What is the division's sales margin? OA. 81.82% OB. 12.27% OC. 72.73% OD. 15% $900,000 135,000 $1,100,000 800,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Chapter 17 Revenue and expense data for the current calendar year for Smith Electronics Company and for the electronics industry are as follows. The Smith Electronics Company data are expressed in dollars. The electronics Industry averages are expressed in percentages. Smith Electronics Electronics Industry Company Average $3,142,000 103.0% Sales 3.0% 150,000 Sales returns and allowances $2,992,000 100.0% Net sales 60.0% 1,850,000 Cost of goods sold 40.0% $1,142,000 Gross profit $750,000 23.0% Selling expenses 257,000 10.0% Administrative expenses 33.0% $1,007,000 Total operating expenses 7.0% $135,000 Operating income Other income 50,000 1.5% $185,000 8.5% 42,500 1.0% Other expense Income before income tax $142,500 7.5% Income tax expense 5.0% 76,000 $66,500 Net Income 2.5% a. Prepare a common-sized income statement comparing the results of operations for Smith Electronics Company with the industry average Round to one decimal place. b. As far as the data permit, comment on…
Problem 9-13 Two firms have sales of $1 million each. Other financial information is as follows: Firm A B EBIT $ 220,000 $ 220,000 Interest expense 40,000 60,000 Income tax 60,000 25,000 Debt 800,000 270,000 Equity 1,200,000 960,000 What are the operating profit margins and the net profit margins for these two firms? Round your answers to two decimal places. Operating profit margins: Firm A: % Firm B: % Net profit margins: Firm A: % Firm B: % What are their returns on assets and on equity? Round your answers to two decimal places. Return on assets: Firm A: % Firm B: % Return on equity: Firm A: % Firm B: %
90 Marston Corporation Statement of Income for the Year Ending December 31, 2022 Using Sales Agents Using Own Sales Force $26,000,000 Sales Cost of goods sold Variable Fixed Gross margin Marketing costs Commissions Fixed costs Operating income $11,700,000 2,870,000 4,680,000 3,420,000 $26,000,000 14,570,000 11,430,000 8,100,000 $ 3,330,000 $11,700,000 2,870,000 2,600,000 5,500,000 14,570,000 11,430,000 8,100,000 $ 3,330,000 Marston is considering hiring its own sales staff to replace the network of agents. Marston will pay its salespeople a commission of 10% and incur additional fixed costs of $2,080,000. 4 Required 1. Calculate Marston Corporation's 2022 contribution margin percentage, breakeven revenues, and degree of operating leverage under each of the two scenarios. (You will first have to recast the 2022 statement of income assuming Marston had hired its own sales staff.) 2. Describe the advantages and disadvantages of each type of sales alternative. 3. In 2023, Marston uses its…
QUESTION 4 The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000 The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed b. Residual income
REVIEW: Use the following to answer questions 28 – 32 T&JR Corp reports the following income statement results: Gross profit $338,000 Interest expense 6,000 15,000 Sales discounts Net Sales 789,000 Operating expense 214,300| Effective tax rate 20% 28. $ Calculate Sales. 29. $ Calculate Income before Income tax (IBT). 30. $ Calculate net income. 31. % Calculate the gross profit margin (one decimal place) 32. % Calculate the profit margin (two decimal places)
TB MC Qu. 10-135 Cabell Products Is a dlvislon of a major... Cabell Products is a division of a major corporation. Last year the division had total sales of $24,240,000, net operating income of $2,278,560, and average operating assets of $6,302,400. The company's minimum required rate of return is 16%. The division's margin is closest to: Multiple Cholce 9.4% 36.2% 38.896 26.0 % EWindows Update Countdown to goodness... We're all set to do the restart you scheduled. OMc Graw Hill 59 F Mostly cloudy 837 AM 10/21/2021 W 21 Type here to search DELL Home PgUp PgDn PrtScr Insert Delete F10 F11 F12 F7 F8 F9 F1 F3 F4 F5 F6 F2
wo years. EXERCISE 15-2 Financial Ratios for Assessing Liquidity LO15-2 ending December 31 appear below. The company did not issue any new common stock during the payable was 12%, the income tax rate was 40%, and the dividend per share of common stock was this year was $18. All of the company’s sales are on account. year Deceof 800,000 shares of common stock were outstanding, The interest rate on the bond year. $0.75 last year and $0.40 this year. The market value of the company's common stock at the end of Weller Corporation Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash .... $ 1,280 $ 1,560 Accounts receivable, net 12,300 9,100 Inventory .... 9,700 8,200 Prepaid expenses 1,800 2,100 Total current assets 25,080 20,960 Property and equipment: Land ..... 6,000 6,000 Buildings and equipment, net .. 19,200 19,000 epeA Total property and equipment ... 25,200 25,000 Total assets $50,280 $45,960 Liabilities and Stockholders' Equity Current…
Problem 9-13 Two firms have sales of $1.5 million each. Other financial information is as follows: FirmABEBIT$290,000$290,000Interest expense 40,000 55,000Income tax 60,000 35,000Debt 2,440,000 3,330,000Equity 1,360,000 1,670,000 What are the operating profit margins and the net profit margins for these two firms? Round your answers to two decimal places. Operating profit margins: Firm A: % Firm B: % Net profit margins: Firm A: % Firm B: % What are their returns on assets and on equity? Round your answers to two decimal places. Return on assets: Firm A: % Firm B: % Return on equity: Firm A: % Firm B: %
COMPANY A INCOME STATEMENT: VERTICAL ANALYSIS COMPANY A COMPANY B SALES REVENUE 100% 100% LESS: COST OF GOOD SOLD 62.40% 71.20% GROSS PROFIT 37.60% 28.80% LESS: OPERATING EXPENSES 18.20% 16.10% OPERATING INCOME 19.40% 12.70% LESS: INTEREST EXPENSE 1.98% 1.60% INCOME BEFORE INCOME TAXES 17.42% 11.10% LESS: INCOME TAX EXPENSE 3.40% 2.98% NET INCOME 14.02% 8.12% using vertical analysis, assess the financial performance of Company A & B with comparison.
Exercise 9-12 (Algo) Calculate gross profit, cost of goods sold, and selling price LO 9-2, 9-3 MBI Incorporated had sales of $36 million for fiscal 2022. The company's gross profit ratio for that year was 26%. Required: a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2022. b. Assume that a new product is developed and that it will cost $488 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2022. c. From a management viewpoint, it could use the estimated selling price as a "target" in conducting marketing research studies to assess its ultimate prospects for success at this price. Complete this question by entering your answers in the tabs below. Required A Required B Required C Calculate the gross profit and cost of goods sold for MBI for fiscal 2022. Note: Enter your answers in millions rounded to 2 decimal places. (i.e., 5,500,000…
Use the following to answer questions 22 – 29 GHT Corporation reports the following amounts in its December 31, 20XD income statement: Cost of goods sold $525,000 Net sales Sales discounts Salaries expense 221,000 Utilities expense $950,000 125,000 20,000 Advertising expense 32,500 Interest revenue 5,000 Effective income tax rate 20% 22. $ Determine Sales 23. $ Determine gross profit 24. $ Determine operating expenses 25. $ Determine Income before income taxes (IBT) 26. $ Determine Income tax expense 27. $ Determine net income 28. Calculate gross profit ratio (round to one decimal place).
Question 4 As the Financial Controller for a manufacturing firm, you have constructed the following partial pro forma income statement for the next fiscal year: Sales (80,000 units) Variable costs Contribution margin Fixed costs Operating income Interest Earnings before taxes Taxes @ 26% Net income RM'000 1,252.0 (438.2) 813.8 (340.0) 473.8 (93.8) 380.0 (98.8) 281.2 Required: a. Calculate the break-even point in units. b. Calculate the break-even point in RM. c. Assume that the management is considering revising the sales price downward to RM13.40 to increase the sales volume by 25%. Is the revised price a better alternative? (^ d. Calculate the degree of operating leverage at this level of output. e. Calculate the degree of financial leverage. f. Determine the degree of combined leverage. g. If sales increase by 15%, what will be the new level of the company's EPS if it has 200,000 shares outstanding? h. Define and briefly discuss the dangers to a firm of having high level of: i.…