. What is the company’s margin (net income after taxes) as a percentage (this is return on sales) and its asset utilization (also called asset velocity and asset turnover)? B. What is the company’s return on assets using net income after taxes? C. Is management creating or destroying wealth (stock price)?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The following data and information are provided for Waltz Corporation.  Use net income after taxes as margin.

Sales Revenue                         $1,000,000                  Average total assets used during the year = $200,000

Cost of Goods Sold                -500,000                      Inventory = $60,000

Gross Margin                            500,000                     Long-term liabilities = $100,000

Selling Expenses                     -386,000                      Accounts receivable = $10,000

Administrative Expenses          -80,000                      Cost of total invested capital = 12%

Net Operating Income               34,000                      Fixed expenses = $300,000

Other Income & Expense           -6,000                      Variable expenses = 666,000

Net Income before Taxes          28,000                      Average price per unit sold = $10                 

Income Taxes                              -8,000

Net Income after Taxes           $ 20,000

 

 

A. What is the company’s margin (net income after taxes) as a percentage (this is return on sales) and its asset utilization (also called asset velocity and asset turnover)?

B. What is the company’s return on assets using net income after taxes?

C. Is management creating or destroying wealth (stock price)?

 
 
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