Carlton West Oil Company, LLC had sales revenue of $500,000, operating expenses of $400,000, no interest expense, income taxes of $10,000, and $700,000 average operating assets in its latest operating year. The owner estimates the company’s weighted average cost of capital at 12%. a. What was the company’s asset utilization? b. What was the company’s return on assets? c. Did management create or destroy wealth (owners’ equity)?
Carlton West Oil Company, LLC had sales revenue of $500,000, operating expenses of $400,000, no interest expense, income taxes of $10,000, and $700,000 average operating assets in its latest operating year. The owner estimates the company’s weighted average cost of capital at 12%. a. What was the company’s asset utilization? b. What was the company’s return on assets? c. Did management create or destroy wealth (owners’ equity)?
Chapter2: Financial Statements, Cash Flow, And Taxes
Section: Chapter Questions
Problem 1STP
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Carlton West Oil Company, LLC had sales revenue of $500,000, operating expenses of $400,000, no interest expense, income taxes of $10,000, and $700,000 average operating assets in its latest operating year. The owner estimates the company’s weighted average cost of capital at 12%.
a. What was the company’s asset utilization?
b. What was the company’s
c. Did management create or destroy wealth (owners’ equity)?
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