Which of the following statements is true? a. The tangible capital asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b. The average age of the tangible capital assets is computed by dividing accumulated depreciation by depreciation expense. c. If net sales increases, the tangible capital asset turnover ratio will decrease. d. A relatively low tangible capital asset turnover ratio signals that a company is efficiently using its assets.
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- 13. Which of the following statements is true? a.The tangible capital asset turnover ratio assists managers in determining the estimated future capital expenditures that are needed. b.The average age of the tangible capital assets is computed by dividing accumulated depreciation by depreciation expense. c.If net sales increases, the tangible capital asset turnover ratio will decrease. d.A relatively low tangible capital asset turnover ratio signals that a company is efficiently using its assets.A. Which of the following is most closely associated with the cost of using assets? a. Asset utilization b. Sales revenue c. Proportion of debt and equity d. Average price B. Which of the following is most closely associated with the return on management’s use of assets? a. Cost of capital b. Mix of equity types c. Prime lending rate d. # of products soldUnder the Dupont Technique, which of the following is false? -Asset management, as represented by the ratio of net sales and average equity, is one of the factors that is considered in deriving the return on assets. -Dupont Technique reveals the factors that determines the firm’s return on asset. -The Company’s assessment of asset utilization and profitability can be determined by the Dupont Technique. -The return on asset is the computed by multiplying the return on sales and the asset turnover.
- Is it true that A high return on assets (Ropa) is an indication that a firm has a high level/value of assets compared to a low profit margin?A firm with a below industry net profit margin can improve its return on total assets by: a. increasing its current ratio c. decreasing its fixed asset turnover b. decreasing its total asset turnover d. increasing its total asset turnoverReturn on net operating assets ( RNOA = NOPAT/Average NOA) is commonly used to evaluate a companies financial performance. If managers cannot increase NOPAT, they can still increase RNOA by reducing the amount of net operating assets (NOA). Listed below are four operating items that can be effectively managed to reduce operating assets, and/or increase RNOA: Inventories Accounts Receivable Plant, Property, and Equipment (fixed assets) Accounts Payable List and explain ONE action you would take, for EACH operating item above, to increase RNOA and/or reduce net operating assets (NOA). In your response, you should have ONE action item for EACH operating item listed.
- Which of the following is consistent with an increase in a firm's return on investment? a. an increase in the asset level required to maintain current sales volume b. costs decrease less than revenues do c. costs increase more than revenues do d. an increase in sales revenueMultiple Choice Questions 1. The following statements are correct for the Economic Value Added (EVA), except, A. The most conventional way to determine the value of the asset is through its economic value added. B. Economic value Added (EVA) is a convenient metric in evaluating investment as it quickly measures the ability of the firm to support its cost of capital using its earnings C. EVA is the excess of the company’s equity after deducting the cost of capital. D. The general concept here is that higher EVA is better for the firm 2. Ernesto, Inc. has projected average earnings every year of P 100 million. Debt to Equity Ratio is 3:1. After tax cost of debt is 5% while cost of equity is 10%. The Board of directors of the company decided to sell the company for P 1 Billion. Compute for the Economic Value Added. (EVA). A. 5 Million B. P 50 Million C. P 0 D. P 25 Million 3. SPRO Corp is planning to expand and new projects is expected to have an EVA of P200,000. The annual coast of…In a DuPont analysis, what are the components of return on assets?a. Net Profit Margin Ratio and Debt Ratiob. Net Profit Margin Ratio and Leverage Ratioc. Net Profit Margin Ratio and Asset Turnover Ratiod. Asset Turnover Ratio and Leverage Ratio
- Why does an increase in the ratio of current assets to total assets decrease both profits and risk as measured by net working capital? How does changes in the ratio of current liabilities to total assets affect profitability and risk?5. Using regression analysis to forecast assets The AFN equation and the financial statement–forecasting approach both assume that assets grow at relatively the same rate as sales. However, the relationship between assets and sales is often a little more difficult than that. In particular, some firms use regression analysis to predict the required assets needed to support a given level of sales. General Services Corp. has used its historical sales and asset data to estimate the following regression equations: Accounts Receivable = –$99,220 + 0.225(Sales) Inventories = $9,110 + 0.180(Sales) General Services Corp. currently has sales of $900,000, but it expects sales to grow by 30% over the next year. Use the regression models to calculate General Services Corp.’s forecasted values for accounts receivable and inventories needed to support next year’s sales. Forecasted Values for Next Year Accounts receivable Inventories Based on the…Why is the operating return on assets ratio also referred to as the operating returnon investment?