Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year? A computer manufacturer has financial statements as follows: Income Statements for Year Ending December 31 (Thousands of Dollars) 2019 2018 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (25%) 22,183 21,475 Net income $66,547 $64,425 Common dividends $56,609 $54,115 Addition to retained earnings $9,938 $10,310 Balance Sheets for Year Ending December 31 (Thousands of Dollars) Assets 2019 2018 Cash and cash equivalents $47,250 $45,000 Short-term investments 3,800 3,600 Accounts Receivable 283,500 270,000 Inventories 141,750 135,000 Total current assets $476,300 $453,600 Net fixed assets 330,750 315,000 Total assets $807,050 $768,600 Liabilities and equity Accounts payable $94,500 $90,000 Accruals 47,250 45,000 Notes payable 26,262 9,000 Total current liabilities $168,012 $144,000 Long-term debt 94,500 90,000 Total liabilities $262,512 $234,000 Common stock 444,600 444,600 Retained Earnings 99,938 90,000 Total common equity $544,538 $534,600 Total liabilities and equity $807,050 $768,600 Other data Tax rate 25% Shares outstanding 15,000,000 Stock price $65 per share WACC 8%

Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year? A computer manufacturer has financial statements as follows: Income Statements for Year Ending December 31 (Thousands of Dollars) 2019 2018 Sales $945,000 $900,000 Expenses excluding depreciation and amortization 812,700 774,000 EBITDA $132,300 $126,000 Depreciation and amortization 33,100 31,500 EBIT $99,200 $94,500 Interest Expense 10,470 8,600 EBT $88,730 $85,900 Taxes (25%) 22,183 21,475 Net income $66,547 $64,425 Common dividends $56,609 $54,115 Addition to retained earnings $9,938 $10,310 Balance Sheets for Year Ending December 31 (Thousands of Dollars) Assets 2019 2018 Cash and cash equivalents $47,250 $45,000 Short-term investments 3,800 3,600 Accounts Receivable 283,500 270,000 Inventories 141,750 135,000 Total current assets $476,300 $453,600 Net fixed assets 330,750 315,000 Total assets $807,050 $768,600 Liabilities and equity Accounts payable $94,500 $90,000 Accruals 47,250 45,000 Notes payable 26,262 9,000 Total current liabilities $168,012 $144,000 Long-term debt 94,500 90,000 Total liabilities $262,512 $234,000 Common stock 444,600 444,600 Retained Earnings 99,938 90,000 Total common equity $544,538 $534,600 Total liabilities and equity $807,050 $768,600 Other data Tax rate 25% Shares outstanding 15,000,000 Stock price $65 per share WACC 8%

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

Section: Chapter Questions

Problem 1PS

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Calculate the profit margin, basic earning power (BEP), return on assets (ROA), and return on equity (ROE). How has the company’s profitability changed during the last year?

A computer manufacturer has financial statements as follows:

Income Statements for Year Ending December 31
(Thousands of Dollars)			2019	2018
Sales				$945,000	$900,000
Expenses excluding depreciation and amortization	812,700	774,000
EBITDA				$132,300	$126,000
Depreciation and amortization		33,100	31,500
EBIT				$99,200	$94,500
Interest Expense			10,470	8,600
EBT				$88,730	$85,900
Taxes (25%)				22,183	21,475
Net income				$66,547	$64,425

Common dividends			$56,609	$54,115
Addition to retained earnings		$9,938	$10,310

Balance Sheets for Year Ending December 31
(Thousands of Dollars)
*Assets*				2019	2018
Cash and cash equivalents			$47,250	$45,000
Short-term investments			3,800	3,600
Accounts Receivable			283,500	270,000
Inventories				141,750	135,000
Total current assets			$476,300	$453,600
Net fixed assets			330,750	315,000
Total assets				$807,050	$768,600

*Liabilities and equity*
Accounts payable			$94,500	$90,000
Accruals				47,250	45,000
Notes payable			26,262	9,000
Total current liabilities			$168,012	$144,000
Long-term debt			94,500	90,000
Total liabilities			$262,512	$234,000
Common stock			444,600	444,600
Retained Earnings			99,938	90,000
Total common equity			$544,538	$534,600
Total liabilities and equity			$807,050	$768,600

Other data
Tax rate				25%

Shares outstanding 15,000,000

Stock price $65 per share

WACC

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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