Red Company has a profit margin of 15 percent on sales of $20,000,000. If the firm has a debt of $7,500,000, total assets of $22,500,000, and an interest cost on a total debt of 5 percent, what is the firm's return on total assets (ROA)? (Round answer to two decimal places.)

Red Company has a profit margin of 15 percent on sales of $20,000,000. If the firm has a debt of $7,500,000, total assets of $22,500,000, and an interest cost on a total debt of 5 percent, what is the firm's return on total assets (ROA)? (Round answer to two decimal places.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 9P

See similar textbooks

Related questions

Q: • Define concept of corporate governance and how important to international financial markets? Outli...

A: International financial markets is defined as the market place, where the financial wealth are trade...

Q: Arnold Inc. is considering a proposal to manufacture high-end protein bars used as food supplements...

A: Here, Cost of Equipment is $1,500,000 Sale Value of Equipment in Year 8 is $432,000 Net Working Capi...

Q: a. What price would you be willing to pay for a share of Acap stock today, if you planned to hold th...

A: Share Price: It represents the current market value of one share to the buyers and sellers. The sha...

Q: How much must Melissa deposit at the beginning of every three months for 5 years into an account at ...

A: Solution:- When an equal amount is deposited each period at the beginning of each period, it is call...

Q: It is assumed that the Cost of equity and rate of return are both constant under Walter’s Model of D...

A: Solution:- Walter’s Model of Dividend is a relevant dividend model, which implies that the dividend ...

Q: Through credits cards lines with a certain credit limit Through a guaranteed credit line that has a ...

A: Banks provide short term credit to the business for maintaining the liquidity and enough working ca...

Q: You are deciding between two mutually exclusive investment opportunities. Both requife the same init...

A: Given: Initial investment =$10 Million Investment A cash flows = $2.3 Million Investment B Cash flow...

Q: Situation: 6 evlenaT aeanepre wet e niog Selling Price: P 1,700 Fixed expenses Selling and administr...

A: We can calculate the contribution by applying the formula. The contribution is the difference betwee...

Q: a The value of an investment account has a doubling time of 13 years and $35,000 was originally depo...

A: As per Bartleby Honor Code, when multiple questions are asked, which are not linked with each other,...

Q: pose that Payout changes its mind and decides to issue a 5% stock dividend ins rchasing 5% of the ou...

A: A company may choose to repurchase its shares in order to increase its stock price and improve its f...

Q: A B 1 Market Capitalization, in millions YUM ZTS ΑAPL Market (OEX) 31/01/18 28506.29 37389.63 369899...

A: Correlation is a statistical measure which measures the degree of response of two variables i.e. ana...

Q: What should the monthly payments be if Leons is to earn 15% compounded monthly on its account receiv...

A: A stream of equal cash flows paid or received periodically is termed as annuity. Annuity is either r...

Q: a. Compute the firm's 2016 net operating income and net income. b. Calculate the firm's operating re...

A: Operating Return on Assets: This ratio shows the efficiency of the management in generating operati...

Q: With interest at 4% compounded quarterly, how much will be required 8 years hence to repay a Php 350...

A: Payment required to be made after 8 years is calculated as future value of loan amount

Q: A contract calls for a payment of P1,200 at the beginning of each month for 12 months. At what rate ...

A: The compound interest is obtained by multiplying the initial the principle amount by one, subsequent...

Q: ne company's total sales are million. (Round to one decimal

A: Dupont analysis refers to the framework established by the Dupont corporation for analyzing the perf...

Q: This problem is a compiex financial problem that requires several skils, perhaps some from previous ...

A: Loan Amount is $123,000 Interest rate is 7.2% Compounded monthly Time period is 30 years To Find: P...

Q: You are considering investment in the following projects. Assume that your discount rate is 12% per ...

A: IRR refers to the internal rate of return and it is that rate at which NPV is nil. NPV (net present ...

Q: A growing business moved to a new building to service a bigger client pool. The building acquired th...

A: Cost of Building is ₱3,000,000 Interest Rate is 12% Time Period is 5 years Compounding Period is Mon...

Q: 52 The Board of Directors of MAT Corporation is planning to make a big acquisition in the next fisc...

A: Solution:- Price / Earnings (P/E) ratio measures that how much times is the market price of share of...

Q: haac has analyzed two mutualy exclusive projects of simlar sire and has compled the following inform...

A: Solution:- While analyzing two mutually exclusive projects, the decision regarding which project to ...

Q: (Net present value calculation) Big Steve's, makers of swizzle sticks, is considering the purchase o...

A: Investment amount = $90,000 Annual cash inflow = $17,000 Period = 9 Years

Q: A man bought a condominium unit worth ₱3.9M a pay a down payment of ₱1.5M and agreed to pay the rema...

A: The 1st installment is paid at the end of the 2nd year. Present worth = present value

Q: A 5-year project will require an investment of $100 million. This comprises of plant and machinery w...

A: Given

Q: (Mini-case) A speculator is considering the purchase of 4 three-month Japanese yen PUT options with ...

A: With the help of given data we will calculate the Speculator profit.

Q: a. What are the free cash flows of the project? (starting with year 0) b. If the cost of capital is

A: Cash flow refers to the amount of cash that a company has after considering all the expenses and c...

Q: Suppose that your parents decide tổ make deposits into a savings account, With the first deposit bei...

A: Given,on the child 18th birthday, Annual withdrawal = $2000, $2,400, $2,800, $3,200Annual Interest r...

Q: Red Company's comparative balance sheet shows the following: P10,000 increase in accounts receivable...

A: Net income = P 100000 Increase in accounts receivables = P 10000 Increase in inventories = P 10000 I...

Q: A research and development project at your company has a 40% chance of producing a breakthrough wort...

A: Expected Value is determined when various values can be created or provided by a project to have a s...

Q: When the default risk is high, ___. the debtor charges high interest the debtor earns more the cred...

A: Default risk is the risk faced by an investor or lender that the borrower becomes unable to pay the ...

Q: Closing Closing Closing Market Price for Price for Date Index value AMZN BAC 2 2/1/2017 3 3/1/2017 4...

A: Given, While calculating the monthly return we use the formula : Closing Price of Current month Cl...

Q: ABC Co. paid out one-half of its 1994 earnings by dividends. Its earnings increased by 20% and the a...

A: Hi student Since there are multiple questions, we will answer only first question.

Q: Bulldogs Inc. expects earnings before interest and taxes of P2,500,000 for the coming year. The fir...

A: Amount EBIT 25,00,000 Less: Interest ( 12% of 5,500,000 ) 660000 EBT 18,40,000 Less: Tax @...

Q: e establishment and usage of a zero-balance account in relation to the cash management strategies of...

A: Zero balance account is very common strategy adopted by companies it is one of the common strategy b...

Q: True or False. 1. Business is purely profit-oriented. 2. Finance is the function in business whic...

A: Business means an organization engaged in commercial activities and providing employment. It may be ...

Q: What does an increasing collection period for accounts receivable suggest about a firm's credit poli...

A: The credit policy of a firm means the policies and conditions attached to lending goods and services...

Q: (Related to Checkpoint 4.2) (Capital structure analysis) The liabilities and owners' equity for Camp...

A: Borrowings are the loan which is taken by the individual to meet its financial requirements. The mor...

Q: You want to be able to withdraw $35,000 from your account each year for 20 years after you retire. Y...

A: Solution:- When an equal amount is withdrawn or deposited for a number of periods, it is called annu...

Q: GT Cap. Corp. will be issuing 5-year P20,000,000-face value bonds at an issue price equal to face. I...

A: The cost which the issuer of bonds need to pay before considering taxation benefit is called the YTM...

Q: The following information is available for Flanders and its two main competitors in the industry, Sa...

A: Acid test ratio is the ratio of current assets without inventory and current liabilities

Q: Why this Strategic, Tactical and Operational decision classification more relevant than classic clas...

A: We know that a manager has to take various decision in achieving the goal set the by management. Her...

Q: he residual theory of dividends argues that dividends a. can only be distributed if there is income...

A: Solution:- Residual theory of dividends means the dividend is the residue left after meeting the cap...

Q: 4. Best Flight Inc. is considering three mutually exclusive alternatives for implementing an automat...

A: To evaluate which alternative to be chosen, it is required to calculate the NPV of the different alt...

Q: (DuPont analysis) Garwryk, Inc., which is financed with debt and equity, presently has a debt ratio ...

A: Solution : Given, Debt ratio = 76 percent Now, Calculating the firm's equity multiplier , Formula,...

Q: The time series line chart below shows the total return on a stock index fund over a certain time pe...

A: The time series analysis is a type of analysis which collects the data points of a stock price at re...

Q: he existence of more EXIM banks contribute to increased international trade within the Caribbean ? I...

A: EXIM are banks which focus on the international trades and they help in import and export business a...

Q: For each of the following pairs of Treasury securities (each with $1,000 par value), an identity whi...

A: a) For A three-year zero-coupon bond or a five-year zero-coupon bond: Current Price= Face Value(1+Di...

Q: The new current ratio is O: (Round to one decimal place.)

A: The current ratio shows the paying capacity to meet short-term liabilities with the available amount...

Q: Which of the following is correct with regards to cash discounts offering? a. It is used lengthen t...

A: Solution:- Cash discount means offering some more discounts to the customers, if they pay the amount...

Q: Calculate the capitalized cost of an equipment maintained at a rate of 6% every year for $10,000, re...

A: Initial cost (C) = $110500 Annual cost (A) = $10000 Replacement cost (R) = $25000 every 3 years r = ...

Question

Video Video

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are $100 million, and it has total assets of $50 million. What is its ROE?
Brandt Corporation had sales revenue of 500,000 for the current year. For the year, its cost of goods sold was 240,000, its operating expenses were 50,000, its interest revenue was 2,000, and its interest expense was 12,000. Brandts income tax rate is 30%. Prepare Brandts multiple-step income statement for the current year.
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
Ace Industries has current assets equal to 3 million. The companys current ratio is 1.5, and its quick ratio is 1.0. What is the firms level of current liabilities? What is the firms level of inventories?
Payne Products had $1.6 million in sales revenues in the most recent year and expects sales growth to be 25% this year. Payne would like to determine the effect of various current assets policies on its financial performance. Payne has $1 million of fixed assets and intends to keep its debt ratio at its historical level of 60%. Payne’s debt interest rate is currently 8%. You are to evaluate three different current asset policies: (1) a restricted policy in which current assets are 45% of projected sales, (2) a moderate policy with 50% of sales tied up in current assets, and (3) a relaxed policy requiring current assets of 60% of sales. Earnings before interest and taxes are expected to be 12% of sales. Payne’s tax rate is 40%. What is the expected return on equity under each current asset level? In this problem, we have assumed that the level of expected sales is independent of current asset policy. Is this a valid assumption? Why or why not? How would the overall risk of the firm vary under each policy?