Revenues Costs of Goods Sold Gross Profit Selling, General and Admin Depreciation EBIT Income tax (35%) Net Income Capital Purchases Changes to NWC A. -$258,750.00 O B. -$153,046.63 Year O O C. $195,972.79 D. $201,324.52 -600,000 +36,000 Year 1 800,000 Year 2 Year 3 800,000 800,000 -320,000 -320,000 -320,000 480,000 480,000 480,000 -105,000 -105,000 -105,000 -200,000 -200,000 -200,000 175,000 175,000 175,000 Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the data above. If the cost of capital is 8.5%, what is the net present value (NPV) of this project? -61,250 -61,250 -61,250 113,750 113,750 113,750 -12,000 -12,000 -12,000

Revenues Costs of Goods Sold Gross Profit Selling, General and Admin Depreciation EBIT Income tax (35%) Net Income Capital Purchases Changes to NWC A. -$258,750.00 O B. -$153,046.63 Year O O C. $195,972.79 D. $201,324.52 -600,000 +36,000 Year 1 800,000 Year 2 Year 3 800,000 800,000 -320,000 -320,000 -320,000 480,000 480,000 480,000 -105,000 -105,000 -105,000 -200,000 -200,000 -200,000 175,000 175,000 175,000 Cromwell Industries is considering a new project which will have costs, revenues, etc. as shown by the data above. If the cost of capital is 8.5%, what is the net present value (NPV) of this project? -61,250 -61,250 -61,250 113,750 113,750 113,750 -12,000 -12,000 -12,000

Fundamentals of Financial Management (MindTap Course List)

15th Edition

ISBN:9781337395250

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter4: Analysis Of Financial Statements

Section: Chapter Questions

Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...

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Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of goods sold 660.0 Gross profit 135.0 Selling expenses 73.5 EBITDA 61.5 Depreciation expenses 12.0 Earnings before interest and taxes (EBIT) 49.5 Interest expenses 4.5 Earnings before taxes (EBT) 45.0 Taxes (40%) 18.0 Net income 27.0 a. Calculate the ratios you think would be useful in this analysis. b. Construct a DuPont equation, and compare the companys ratios to the industry average ratios. c. Do the balance-sheet accounts or the income statement figures seem to be primarily responsible for the low profits? d. Which specific accounts seem to be most out of line relative to other firms in the industry? e. If the firm had a pronounced seasonal sales pattern or if it grew rapidly during the year, how might that affect the validity of your ratio analysis? How might you correct for such potential problems?
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