PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Textbook Question
Chapter 12, Problem 15PS
Accounting measures of performance* The Modern Language Corporation earned $1.6 million on net assets of $20 million. The cost of capital is 11.5%. Calculate the net
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Kairos Industries achieved $17 million in sales and $3 million in net income. The value of assets totaled $6 million, as did the equal sum of liabilities plus equity. The company also paid taxes at 32% and interest at 6%. Determine the Net Profit Margin, Assets Turnover Ratio, ROA, ROE and Return on Invested Capital (ROIC).
Gibson Corporation’s balance sheet indicates that the company has $580,000 invested in operating assets. During the year, Gibson earned operating income of $67,280 on $1,160,000 of sales.
Required
Compute Gibson’s profit margin for the year.
Compute Gibson’s turnover for the year.
Compute Gibson’s return on investment for the year.
Recompute Gibson’s ROI under each of the following independent assumptions:(1) Sales increase from $1,160,000 to $1,392,000, thereby resulting in an increase in operating income from $67,280 to $76,560.(2) Sales remain constant, but Gibson reduces expenses, resulting in an increase in operating income from $67,280 to $69,600.(3) Gibson is able to reduce its invested capital from $580,000 to $464,000 without affecting operating income.
Last year a company had sales of $400,000, average operating assets of $166,667, and a return on investment of 18%. What was the company's net operating income for the year?
Group of answer choices
$30,000
$42,000
$25,500
$60,000
$72,000
Chapter 12 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 12 - Terminology Define the following: a. Agency costs...Ch. 12 - Prob. 2PSCh. 12 - Prob. 3PSCh. 12 - Prob. 4PSCh. 12 - Prob. 5PSCh. 12 - Prob. 6PSCh. 12 - Management compensation We noted that management...Ch. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Prob. 11PSCh. 12 - Economic income Fill in the blanks: A projects...Ch. 12 - Economic income Consider the following project:...Ch. 12 - Accounting measures of performance Use the Beyond...Ch. 12 - Accounting measures of performance The Modern...Ch. 12 - Prob. 17PSCh. 12 - EVA Here are several questions about economic...Ch. 12 - EVA Herbal Resources is a small but profitable...Ch. 12 - Prob. 20PSCh. 12 - EVA Use the Beyond the Page feature to access the...Ch. 12 - EVA Ohio Building Products (OBP) is considering...
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