The following information pertains to the Classic Burger Restaurant chain: Sales $600, 000 Variable costs 300,000 Fixed costs 100, 000 EBIT 200,000 Interest expense 50,000 Earnings before taxes 150, 000 Taxes (30%) 45,000 Net income $105,000 a. If sales increase by 10%, what will be the new level of EPS if the firm has 100, 000 shares outstanding? b. What is the percentage increase in EPS? Explain the difference between the percentage increase in sales and the percentage increase in EPS,

The following information pertains to the Classic Burger Restaurant chain: Sales $600, 000 Variable costs 300,000 Fixed costs 100, 000 EBIT 200,000 Interest expense 50,000 Earnings before taxes 150, 000 Taxes (30%) 45,000 Net income $105,000 a. If sales increase by 10%, what will be the new level of EPS if the firm has 100, 000 shares outstanding? b. What is the percentage increase in EPS? Explain the difference between the percentage increase in sales and the percentage increase in EPS,

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter3: Evaluation Of Financial Performance

Section: Chapter Questions

Problem 13P

See similar textbooks

Similar questions

The following information pertains to the Classic Burger Restaurant chain: Sales $600,000 Variable costs 300,000 Fixed costs 100,000 EBIT 200,000 Interest expense 50,000 Earnings before taxes 150,000 Taxes (30%) 45,000 Net income $105,000 a. If sales increase by 10%, what will be the new level of EPS if the firm has 100,000 shares outstanding? b. What is the percentage increase in EPS? Explain the difference between the percentage increase in sales and the percentage increase in EPS. (*You must show your calculation process as well.)
level of net income, what level of sales will the company have to achieve? Assume that Hebner's interest CEO is unhappy with the forecast and wants the firm to achieve a net income equal to $240,000. In order to achieve this the company's sales were to increase to $1.5 million, its cost of goods sold would increase to $900,000. The company's Question 10 Hebner Housing Corporation has forecast the following numbers for this upcoming year: Sales = $1,000,000. Cost of goods sold = 600,000. Interest expense = 100,000. Net income = 180,000. The company is in the 40 percent tax bracket. Its cost of goods sold always represents 60 percent of its sales That is if pense remains constant. Question 11
A small company has the following data: Net income: $240 Sales: $10,000 Total assets: $6,000 Debt ratio: 75% TIE ratio: 2.0 Current ratio: 1.2 BEP ratio: 13.33% If the firm could streamline operations, cut operating costs, and raise net income to $300, without affecting sales or the balance sheet (the additional profits will be paid out as dividends), by how much would its ROE increase?
PLEASE MAKE IT IN EXCEL AND SHOW THE FORMULAS (Take pictures) Company X, S.A.'s current sales are 12.5 million. An increase of 5% is estimated for next year, and its uncollectible accounts will go from the current 1% to 1.5%. What is the change in profit due to this customer behavior? A) 1,500 B) 3,000 C) 4,500 D) 5,000 (Choose a option)
Please show work and explain answer 9. A firm with sales of $1,000,000, net profits after taxes of $30,000, total assets of $1,500,000, and common stockholders' investment of $750,000 has a return on equity of ________. A) 20 percent B) 15 percent C) 3 percent D) 4 percent 10) The DuPont formula allows a firm to break down its return into the net profit margin, which measures the firm's profitability on sales, and its total asset turnover, which indicates how efficiently the firm has used its assets to generate sales. TRUE FALSE
A firm has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000, total assets of $22,500,000, and an after-tax interest cost on total debt of 5 percent, what is the firm's ROA? Group of answer choices 8.4% 10.9% 12.0% 13.3% 15.1%
Choose the correct letter of answer: In the current year, Company A had P15 Million in sales, while total fixed costs were held to P6 Million. The firm's total assets at year-end were P20 Million and the debt/equity ratio was calculated at 0.60. If the firm's EBIT is P3 Million, the interest on all debt is 9%, and the tax rate is 40%, what is the firm's return on equity? a. 11.16%b. 14.4%c. 18.6%d. 24.0%e. 28.5%
A company earns Rs. 10 per share at an internal rate of 15%. The firm has a policy of paying 40% of earning as dividends. If the required rate of return is 10%, determine the price of the share under Gorden’s Model.Solve using excel
Consider the following simplified financial statements for the Wims Corporation (assuming no income taxes): Balance Sheet $21,000 Assets $10,700 Debt 14,400 Equity Net Income $6,600 Total $ 10,700 Total The company has predicted a sales increase of 11 percent. It has predicted that every Item on the balance sheet will increase by 11 percent as well. Create the pro forma statements and reconcile them. What is the plug variable here? Income Statement Sales Costs Multiple Choice O O $6.714 $6,743 $6,726 $16,949 $6,720 $ 5,400 5,300 $10,700
You've collected the following information about Molino, Inc.: $205,000 Sales $ 14,200 $ 9,100 $82,000 $ 63,000 Net income Dividends Total debt Total equity a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. If it does grow at this rate, how much new borrowing will take place in the coming year, assuming a constant debt-equity ratio? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What growth rate could be supported with no outside financing at all? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. 9.79 8 % Sustainable growth rate b. Additional borrowing Internal growth rate a. 7,224.20 6.69 c. %24
Assume the following information pertains to Zigler Corporation: Sales $1,000,000 Total Variable Costs (40% of sales) 400,000 Fixed Costs EBIT Interest Expense EBT Taxes (21%) EAT #shares outstanding EPS 300,000 300,000 100,000 200,000 42,000 158,000 100,000 $1.58 Determine EPS if sales increase to $1,200,000. Then determine the DOL, the DFL, and the DCL.
Aruz Berhad sells its product at RM45 per unit. Fixed cost per year is RM220,000 while variable cost is RM15 per unit. The firm has debt capital of RM450,000 and its interest rate is 7%. Firm tax rate is 30% and the total number of shares issued is 300,000 units. You are required to: i. Calculate earnings before interest and tax (EBIT) and earnings per share (EPS) at total sales of 15,000 units. ii. Calculate the degree of financial leverage at sales level of 15,000 units.