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1. If a firm's net income (profits before taxes) is $120,000 and it has total assets of $1.5 million, what is its return on assets?

1. If a firm's net income (profits before taxes) is $120,000 and it has total assets of $1.5 million, what is its return on assets?

Intermediate Financial Management (MindTap Course List)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter7: Analysis Of Financial Statements
Section: Chapter Questions
Problem 7P: Ace Industries has current assets equal to 3 million. The companys current ratio is 1.5, and its...
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SPREADSHEET PROBLEMS 1. If a firm's net income (profits before taxes) is $120,000 and it has total assets of $1.5 million, what is its return on assets? 2. If a firm's total assets is $2.5 million and its return on assets is 12 percent, what is its net income? 3. If a firm is able to sustain the same level of operations in terms of sales and administrative expenses but reduces its materials cost by $50,000 through smarter purchases, what is the profit-leverage effect on gross profits? What is the profit- leverage effect on profits before taxes? 4. If a firm's cost of goods sold is $2.5 million and its average inventory is $500,000, what is the inventory turnover? 5. If a firm's cost of goods sold is $5 million and its inventory turnover is ten times, what is the average inventory? 6. If a firm's inventory turnover is eight times and its average inventory is $160,000, what is the cost of goods sold? 7. A retailer in Las Vegas has an ending inventory of $250,000 as of December 31, 2016, and the following accounting information. ENDING INVENTORY COST OF GOODS SOLD MONTH January February March April May June July August September October November December $225,000 $325,000 $240,000 $325,000 $460,000 $220,000 S85,000 $156.000 $220,000 $265,000 $100,000 $350.000 $1.200,000 $1.250,000 $1,350,000 $1,500,000 $950,000 $850,00 $1.650,000 $1,325,000 $1,750,000 $850,000 $2,200,000 $3.500.000 a. Compute the monthly inventory turnover ratio for each of the twelve months, b. What are the annual cost of goods sold and the average inventory for the year? c. Compute the annual inventory turnover ratio. How is the retailer's performance compare to the industry standard, assuming its business is similar to Walmart's?
Transcribed Image Text:SPREADSHEET PROBLEMS 1. If a firm's net income (profits before taxes) is $120,000 and it has total assets of $1.5 million, what is its return on assets? 2. If a firm's total assets is $2.5 million and its return on assets is 12 percent, what is its net income? 3. If a firm is able to sustain the same level of operations in terms of sales and administrative expenses but reduces its materials cost by $50,000 through smarter purchases, what is the profit-leverage effect on gross profits? What is the profit- leverage effect on profits before taxes? 4. If a firm's cost of goods sold is $2.5 million and its average inventory is $500,000, what is the inventory turnover? 5. If a firm's cost of goods sold is $5 million and its inventory turnover is ten times, what is the average inventory? 6. If a firm's inventory turnover is eight times and its average inventory is $160,000, what is the cost of goods sold? 7. A retailer in Las Vegas has an ending inventory of $250,000 as of December 31, 2016, and the following accounting information. ENDING INVENTORY COST OF GOODS SOLD MONTH January February March April May June July August September October November December $225,000 $325,000 $240,000 $325,000 $460,000 $220,000 S85,000 $156.000 $220,000 $265,000 $100,000 $350.000 $1.200,000 $1.250,000 $1,350,000 $1,500,000 $950,000 $850,00 $1.650,000 $1,325,000 $1,750,000 $850,000 $2,200,000 $3.500.000 a. Compute the monthly inventory turnover ratio for each of the twelve months, b. What are the annual cost of goods sold and the average inventory for the year? c. Compute the annual inventory turnover ratio. How is the retailer's performance compare to the industry standard, assuming its business is similar to Walmart's?
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