Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 28, Problem 19PS
Financial ratios Sara Togas sells all its output to Federal Stores. The following table shows selected 2017 financial data, in millions, for the two firms:
The company’s tax rate is 35%. Calculate the sales-to-assets ratio, the operating profit margin, and the
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The Carioco Company has two divisions that operate independently of one another. The financial data for the year 2022 reported the following results:
Alpha Beta
Sales $3,000,000 $2,500,000
Operating income 750,000 550,000
Taxable income 650,000 375,000
Investment 6,000,000 5,000,000
The company's desired rate of return is 10%. Income is defined as operating income.
Required: What are the respective return-on-investment ratios for the Alpha and Beta Divisions?
a.
0.110 and 0.125
b.
0.125 and 0.110
c.
0.050 and 0.150
d.
0.108 and 0.075
Keller Cosmetics maintains an operating profit margin of 9.00% and a sales-to-assets ratio of 3.90. It has assets of $700,000 and equity of $500,000. Assume that interest payments are $50,000 and the tax rate is 30%.
a. What is the return on assets? (Enter your answer as a percent rounded to 2 decimal places.)
b. What is the return on equity? (Enter your answer as a percent rounded to 2 decimal places.)
Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Sales Interest Payment Net Income Assets at Start of Year Federal Stores $117 $21 $27 $67 Sara Togas 37 18 21 28.5 Assume tax rate is 35%.
a. Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms. (Do not round intermediate calculations. Round the sales-to-assets ratio answers to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal…
In fiscal year 2021, Walmart Inc. (WMT) reported annual revenue of $572.75 billion, gross profit of $143.75 billion, and net income of $13.67 billion. Costco Wholesale Corporation (COST) had revenue of $195.9 billion, gross profit of $25.25 billion, and net income of $5.01 billion. a. Compare the gross margins for Walmart and Costco. b. Compare the net profit margins for Walmart and Costco. c. Which firm was more profitable in 2021?
Chapter 28 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 28 - Prob. 1PSCh. 28 - Financial ratios Table 28.10 gives abbreviated...Ch. 28 - Performance measures Look again at Table 28.10. At...Ch. 28 - Prob. 5PSCh. 28 - Financial ratios True or false? a. A companys...Ch. 28 - Book rates of return Keller Cosmetics maintains an...Ch. 28 - Prob. 8PSCh. 28 - Prob. 9PSCh. 28 - Prob. 10PSCh. 28 - Prob. 11PS
Ch. 28 - Prob. 12PSCh. 28 - Prob. 13PSCh. 28 - Prob. 14PSCh. 28 - Performance measures Describe some alternative...Ch. 28 - Prob. 16PSCh. 28 - Prob. 17PSCh. 28 - Prob. 18PSCh. 28 - Financial ratios Sara Togas sells all its output...Ch. 28 - Prob. 20PSCh. 28 - Prob. 21PSCh. 28 - Prob. 22PSCh. 28 - Prob. 23PSCh. 28 - Prob. 25PSCh. 28 - Prob. 26PSCh. 28 - Prob. 27PS
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