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- If current assets are $100,000 and current liabilities are $42,000, what is the working capital? A. 200 percent B. 50 percent C. 2.0 D. $58,000EXCESS CAPACITY Krogh Lumbers 2019 financial statements are shown here. Krogh Lumber: Balance Sheet as of December 31, 2019 (thousands of dollars) Krogh Lumber: Income Statement for December 31, 2019 (thousands of dollars) a. Assume that the company was operating at full capacity in 2019 with regard to all items except fixed assets; fixed assets in 2019 were being utilized to only 75% of capacity. By what percentage could 2020 sales increase over 2019 sales without the need for an increase in fixed assets? b. Now suppose 2020 sales increase by 25% over 2019 sales. Assume that Krogh cannot sell any fixed assets. All assets other than fixed assets will grow at the same rate as sales; however, after reviewing industry averages, the firm would like to reduce its operating costs/sales ratio to 82% and increase its total liabilities-to-assets ratio to 42%. The firm will maintain its 60% dividend payout ratio, and it currently has 1 million shares outstanding. The firm plans to raise 35% of its 2020 forecasted interest-bearing debt as notes payable, and it will issue bonds for the remainder. The firm forecasts that its before-tax cost of debt (which includes both short- and long-term debt) is 11%. Any stock issuances or repurchases will be made at the firms current stock price of 40. Develop Kroghs projected financial statements like those shown in Table 16.2. What are the balances of notes payable, bonds, common stock, and retained earnings?Colter Steel has $5,300,000 in assets. Temporary current assets $ 2,600,000 Permanent current assets 1,580,000 Fixed assets 1,120,000 Total assets $ 5,300,000 Assume short-term interest rates are 11 percent and long-term rates are 2 percentage points lower than short-term rates. Earnings before interest and taxes are $1,120,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be? Earnings after taxes
- Global Imex has two divisions; one located at Accra and the other in Takoradi.The following is an extract from the annual report for the 2010 financial year ACCRA TAKORADI Profit Before Depreciation 450,000 620,000 Depreciation 120,000 130,000 Non Current Assets 1,200,000 1,300,000 Current Assets 750,000 1,000,000 Current Liabilities 350,000 400,000 Cost of Capital is 20% Required (i) Using Return on Investment (ROI) and Residual Income, comment on the performance of the divisions.(ii) The Takoradi branch intends to sell one of the non-current assets with book value of GH¢120,000. This asset generates a profit of GH¢60,000. Accra also wants to acquire another asset costing GH¢90,000 that will generate a profit of GH¢40,000. To what extent will the decisions affect the performance of the divisions?Colter Steel has $5,000,000 in assets. Temporary current assets $ 2,000,000 Permanent current assets 1,550,000 Fixed assets 1,450,000 Total assets $ 5,000,000 Assume the term structure of interest rates becomes inverted, with short-term rates going to 11 percent and long-term rates 3 percentage points lower than short-term rates. Earnings before interest and taxes are $1,060,000. The tax rate is 20 percent. If long-term financing is perfectly matched (synchronized) with long-term asset needs, and the same is true of short-term financing, what will earnings after taxes be?Mason Corporation had $1,164,000 in invested assets, sales of $1,240,000, income from operations amounting to $243,000, and a desired minimum return of 12%. Round your answer to two decimal places. The investment turnover for Mason Corporation is a.1.07 b.0.85 c.1.28 d.1.60
- Omar Sdn Bhd requires a return on capital of 15 percent. The following information is available for 2020: Division X Division Y Division Z Book Current Book Current Book Current Sales RM200,000 RM200,000 RM400,000 RM400,000 RM600,000 RM600,000 Income 24,000 20,000 32,000 34,000 37,500 39,000 Assets 120,000 160,000 180,000 200,000 450,000 435,000 Required: a. Compute return on investment using both book and current values for each division. (Round answer to three decimal places.) b. Compute residual income for both book and current values for each division. c. Does book value or current value provide the better basis for performance evaluation? d. Which division do you consider the most successful?Sam Division reported a residual income of P200,000 for the year just ended. The division had P8,000,000 of invested capital and P1,000,000 of income. On the basis of this information, the required rate of return was: (round-off to 1 decimal places)Mason Corporation had $1,096,000 in invested assets, sales of $1,237,000, income from operations amounting to $203,000, and a desired minimum rate of return of 15%. The residual income for Mason Corporation is a.$38,600 b.$54,040 c.$0 d.($5,300)
- An entity reported revenue of P50,000,000, excluding intersegment sales of P10,000,000, expenses of P47,000,000 and net income of P3,000,000 for the current year. Expenses included payroll costs of P15,000,000. The combined asset of all segment totaled P45,000,000 1. What is the minimum amount of sales to a major customer? a. 5,000,000 b. 4,000,000 c. 4,500,000 d. 6,000,000 2. What is the minimum amount of external revenue to be disclosed by reportable segments? a. 30,000,000 b. 45,000,000 c. 33,750,000 d. 37,500,000Ausel's Cabinets has $27,600 in net fixed assets and is operating at 96 percent of capacity. Sales are $36,200 currently. What is the required increase in fixed assets if sales are projected to increase by 14 percent? Multiple Choice$2,605 $6,833 $4,205 $3,400, $0____ 66. JSW Corporation had $1,100,000 in invested assets, sales of $1,210,000, income from operations amounting to $242,000, and a desired minimum rate of return of 15%. The residual income for JSW is: a. $60,500 b. $22,000 c. $77,000 d. $24,200 ____ 67. The CJW Corporation has sales of $4,500,000. It also has invested assets of $2,000,000 and operating expenses of $3,600,000. The company has established a minimum rate of return of 7%. What is CJW Corporation's rate of return on investment? a. 56% b. 20% c. 45% d. 25% ____ 68. The point where the sales line and the total costs line intersect on the cost-volume-profit chart represents: a. the maximum possible operating loss b. the maximum possible operating income c. the total fixed costs d. the break-even point ____ 69. The entry to record direct labor costs into production in a job order cost accounting system is: a.…