In January 2017, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the machines fell by 30 percent. During 2017, Tim spent $200,000 on new machines. During 2017, Tim's net investment was $100,000. $200,000. $300,000. O-$100,000. $500,000.

In January 2017, Tim's Gyms, Inc. owned machines valued at $1 million. During the year, the market value of the machines fell by 30 percent. During 2017, Tim spent $200,000 on new machines. During 2017, Tim's net investment was $100,000. $200,000. $300,000. O-$100,000. $500,000.

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter12: Corporate Valuation And Financial Planning

Section: Chapter Questions

Problem 6P

See similar textbooks

Similar questions

James Furnishings generated $2 million in sales during 2016, and its year-end total assets were $1.5 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.75 for every $1.00 increase in sales. James' profit margin is 3%, and its retention ratio is 35%. How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent.
Maggie's Muffins, Inc., generated $2,000,000 in sales during 2016, and its year-end total assets were $1,600,000. Also, at year-end 2016, current liabilities were $1,000,000, consisting of $300,000 of notes payable, $500,000 of accounts payable, and $200,000 of accruals. Looking ahead to 2017, the company estimates that its assets must increase at the same rate as sales, its spontaneous liabilities will increase at the same rate as sales, its profit margin will be 3%, and its payout ratio will be 60%. How large a sales increase can the company achieve without having to raise funds externally; that is, what is its self-supporting growth rate? Do not round intermediate steps. Round your answers to the nearest whole. Give typing answer with explanation and conclusion
For 2018, Bargain Basement Stores reported $11,500 of sales and $5,000 of operating costs (including depreciation). The company has $20,500 of total invested capital, the weighted average cost of that capital (the WACC) was 8%, and the federal-plus-state income tax rate was 40%. What was the firm's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during 2017?
At year-end 2015, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $425,000. Sales, which in 2015 were $2.3 million, are expected to increase by 30% in 2016. Total assets and accounts payable are proportional to sales, and that relationship will be maintained. Wallace typically uses no current liabilities other than accounts payable. Common stock amounted to $430,000 in 2015, and retained earnings were $340,000. Wallace has arranged to sell $65,000 of new common stock in 2016 to meet some of its financing needs. The remainder of its financing needs will be met by issuing new long-term debt at the end of 2016. (Because the debt is added at the end of the year, there will be no additional interest expense due to the new debt.) Its net profit margin on sales is 7%, and 40% of earnings will be paid out as dividends. How much new long-term debt financing will be needed in 2016? (Hint: AFN - New stock = New long-term debt.) Do not round…
Paladin Furnishings generated $4 million in sales during 2016, and its year-end total assets were $3.2 million. Also, at year-end 2016, current liabilities were $500,000, consisting of $200,000 of notes payable, $200,000 of accounts payable, and $100,000 of accrued liabilities. Looking ahead to 2017, the company estimates that its assets must increase by $0.80 for every $1.00 increase in sales. Paladin's profit margin is 5%, and its retention ratio is 40%. How large of a sales increase can the company achieve without having to raise funds externally? Write out your answer completely. For example, 25 million should be entered as 25,000,000. Do not round intermediate calculations. Round your answer to the nearest cent. $
Botticelli Inc. was organized in late 2018 to manufacture and sell hosiery. At the end of its fourth year of operation, the company has been fairly successful, as indicated by the following reported net incomes. 2018 $140,000a 2020 $205,000 2019 160,000b 2021 276,000 a Includes a $10,000 increase because of change in bad debt experience rate. b Includes a gain of $30,000. The company has decided to expand operations and has applied for a sizable bank loan. The bank officer has indicated that the records should be audited and presented in comparative statements to facilitate analysis by the bank. Botticelli Inc. therefore hired the auditing firm of Check & Doublecheck Co. and has provided the following additional information. 1. In early 2019, Botticelli Inc. changed its estimate from 2% of receivables to 1% on the amount of bad debt expense to be charged to operations. Bad debt expense for 2018, if a 1% rate had been used, would have been…
Target industries reported $11,500 of sales and $5,000 of operating costs (including depreciation). The company has $20,500 of total invested capital, the weighted average cost of that capital (the WACC) was 8%, and the federal-plus-state income tax rate was 40%. What was the firm's Economic Value Added (EVA), i.e., how much value did management add to stockholders' wealth during 2017?
“WalkFast” Footwear Ltd. earned 10 million $ in 2017. The cost of goods sold was 4.75 million $. The annual report shows they made a profit of 1.23 million $ before considering the tax. According to the balance sheet, the year ending inventory is of 1.89 million $ and total asset is worth 18million $ now. However, the management is not satisfied with the performance of supply chain. They have instructed to save at least 2% in purchasing. What will be the financial effect if this instruction is fulfilled. Explain using PM, ROA
In 2014, GoPro spent $27.5 million on capital expenditures, experienced an increase in net working capital (including cash) equal to $239 million, and realized $18 million in depreciation. What is GoPro's unlevered free cash flow for 2014
Doral Division of Resorts International reported net operating profit after taxes totaling $120,000 in 2017. The cost of capital is 10.5 percent and the invested capital is $560,000. R&D incurred in 2017 was $100,000. The company's policy is to amortize intangible assets over 4 years. The income tax rate is 30 percent. How much is the company's economic value added for 2017? a. $75,825 b. $105,825 c. $825 d. $70,825 Do not copy from Chegg and give complete answer with explanation
The Booth Company's sales are forecasted to double from $1,000 in 2016 to $2,000 in 2017. Here is the December 31, 2016, balance sheet: Cash $ 100 Accounts payable $ 50 Accounts receivable 200 Notes payable 150 Inventories 200 Accruals 50 Net fixed assets 500 Long-term debt 400 Common stock 100 Retained earnings 250 Total assets $1000 Total liabilities and equity $1000 Booth's fixed assets were used to only 50% of capacity during 2016, but its current assets were at their proper levels in relation to sales. All assets except fixed assets must increase at the same rate as sales, and fixed assets would also have to increase at the same rate if the current excess capacity did not exist. Booth's after-tax profit margin is forecasted to be 6% and its payout ratio to be 30%. What is Booth's additional funds needed (AFN) for the coming year? Round your answer to the nearest dollar.
An engineer in 1050 was earning $6,600 a year. In 2017 she earned $86,000 a year. However, on average, prices were higher than in 1950. What was her real income in 2017 in terms of constant 1950 dollars?