Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The income statement comparison for Forklift Material Handling shows the income statement for the current and prior year.
| FORKLIFT MATERIAL HANDLING Income statement Comparison |
|||
| Current Year | Prior Year | ||
| (Amounts in thousands) | |||
| Sales | $33,750 | $24,800 | |
| Cost of goods sold | 21,937.5 | 16,864 | |
| Gross profit | $11,812.5 | $7,936 | |
| Expenses: | |||
| Wages | $8,800 | $6,189 | |
| Utilities | 700 | 200 | |
| Repairs | 169 | 350 | |
| Selling | 506 | 200 | |
| Total Expenses | $10,175 | $6,939 | |
| Operating income | ? | ? | |
| Operating income % | ? | ? | |
| Total assets (investment base) | $4,400 | $1,400 | |
| Return on investment | ? | ? | |
| Residual income (8% cost of capital) | ? | ? |
A. Determine the operating income (loss) (dollars) for each year. If required round final answers to two decimal places.
B.Determine the operating income (loss) (percentage) for each year.If required round final answers to two decimal places.
C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places.
D.Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar. For those boxes in which you must enter subtractive or negative numbers use a minus sign.
Transcribed Image Text:A. Determine the operating income (loss) (dollars) for each year. If required round final answers to two decimal places.
Current Year
Prior Year
Operating income (loss) $
B. Determine the operating income (loss) (percentage) for each year. If required round final answers to two decimal places.
Current Year
Prior Year
Operating income (loss)
c. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base,
calculate the return on investment. Was the decision to invest additional assets in the company successful? If required round final answers to two decimal places.
Current Year
Prior Year
Return on investment
%
%
D. Assuming an 8% cost of capital, calculate the residual income for each year. Do not round intermediate computations and round final answers to nearest whole dollar.
For those boxes in which you must enter subtractive or negative numbers use a minus sign.
Current Year
Prior Year
Residual income $
The residual income related to the investment
in the current year. This
with the ROI results. Management
consider
both methods in their analysis of the investment.
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