PRIN.OF CORPORATE FINANCE
13th Edition
ISBN: 9781260013900
Author: BREALEY
Publisher: RENT MCG
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Chapter 12, Problem 15PS
Accounting measures of performance* The Modern Language Corporation earned $1.6 million on net assets of $20 million. The cost of capital is 11.5%. Calculate the net
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Chapter 12 Solutions
PRIN.OF CORPORATE FINANCE
Ch. 12 - Terminology Define the following: a. Agency costs...Ch. 12 - Prob. 2PSCh. 12 - Prob. 3PSCh. 12 - Prob. 4PSCh. 12 - Prob. 5PSCh. 12 - Prob. 6PSCh. 12 - Management compensation We noted that management...Ch. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Prob. 11PSCh. 12 - Economic income Fill in the blanks: A projects...Ch. 12 - Economic income Consider the following project:...Ch. 12 - Accounting measures of performance Use the Beyond...Ch. 12 - Accounting measures of performance The Modern...Ch. 12 - Prob. 17PSCh. 12 - EVA Here are several questions about economic...Ch. 12 - EVA Herbal Resources is a small but profitable...Ch. 12 - Prob. 20PSCh. 12 - EVA Use the Beyond the Page feature to access the...Ch. 12 - EVA Ohio Building Products (OBP) is considering...
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- Briggs Company has operating income of $36,000, invested assets of $180,000, and sales of $720,000. Use the DuPont formula to compute the return on investment. a. Profit margin %b. Investment turnover c. Return on investmentarrow_forward14. Briggs Company has operating income of $33,516, invested assets of $133,000, and sales of $478,800. Use the DuPont formula to compute the return on investment. If required, round your answers to two decimal places. a. Profit margin ____ % b. Investment turnover ____ c. Return on investment ____ %arrow_forwardThe balance sheet of ATLF, Inc. reports total assets of $1,950,000 and $2,050,000 at the beginning and end of the year, respectively. Net income and sales for the year are $150,000 and $1,000,000, respectively. What is ATLF's profit margin? Select one: a. 10% Ob. 8% O c. 7.5% O d. 15% e. 12%arrow_forward
- Use this information for Mason Corporation to answer the question that follow. Mason Corporation had $1,058,000 in invested assets, sales of $1,229,000, income from operations amounting to $202,000, and a desired minimum return of 12%. Round the percentage to one decimal place. The profit margin for Mason Corporation is Oa. 19.1% Ob. 16.4% Oc. 86.1% IC. Od. 12.0%arrow_forwardDTO, Inc., has sales of $32 million, total assets of $25 million, and total debt of $7 million. a. If the profit margin is 6 percent, what is the net income? b. What is the ROA? c. What is the ROE?arrow_forwardGibson Corporation's balance sheet indicates that the company has $580,000 invested in operating assets. During Year 2, Gibson earned operating income of $67,280 on $1,160,000 of sales. Required a. Compute Gibson's profit margin for Year 2. b. Compute Gibson's turnover for Year 2. c. Compute Gibson's return on investment for Year 2. d. Recompute Gibson's ROI under each of the following independent assumptions: (1) Sales increase from $1,160,000 to $1,392,000, thereby resulting in an increase in operating income from $67,280 to $76,560. (2) Sales remain constant, but Gibson reduces expenses, resulting in an increase in operating income from $67,280 to $69,600. (3) Gibson is able to reduce its invested capital from $580,000 to $464,000 without affecting operating income. Complete this question by entering your answers in the tabs below. Req A to C Req D Compute Gibson's profit margin, turnover and return on investment for Year 2. Note: Round "Profit margin" and "Return on investment" to…arrow_forward
- Franklin Corporation's balance sheet indicates that the company has $570,000 invested in operating assets. During Year 2, Franklin earned operating income of $64,980 on $1,140,000 of sales. Required a. Compute Franklin's profit margin for Year 2. b. Compute Franklin's turnover for Year 2. c. Compute Franklin's return on investment for Year 2. d. Recompute Franklin's ROI under each of the following independent assumptions: (1) Sales increase from $1,140,000 to $1,368,000, thereby resulting in an increase in operating income from $64,980 to $82,080. (2) Sales remain constant, but Franklin reduces expenses, resulting in an increase in operating income from $64.980 to $67,260. (3) Franklin is able to reduce its invested capital from $570,000 to $456,000 without affecting operating income. Complete this question by entering your answers in the tabs below. Req A to C Req D Compute Franklin's profit margin, turnover and return on investment for Year 2. Note: Round "Profit margin" and "Return…arrow_forwardLewis Company has operating income of $265,000. Its return on investment (ROI) is 53%, while its target rate of return is 7%. The total assets of Lewis Company may be closest to O A. $140,450. O B. $3,785,714. O C. $18,550. O D. $500,000arrow_forwardConsider the information in the following table. Using the DuPont formula, calculate the rate of return on investment. Income from operations $70,000 Invested assets 250,000 Sales 560,000arrow_forward
- Assume that a company has the following data: EBIT=1,200 EBITDA Margin=9.4% Tax rate 39% Net PP&E=2680 Net Working Capital=812 Sales = 14351 Depreciation and Amortization=376 Stores=400 Calculate Return on Capital (or ROIC) Please show your work.arrow_forwardWhat is the company's ROA? Denver, Incorporated, has sales of $27 million, total assets of $24.9 million, and total debt of $5.7 million. Assume the profit margin is 9 percent.arrow_forwardFlitter reported net income of $23,500 for the past year. At the beginning of the year the company had $212,000 in assets and $62,000 in liabilities. By year end, assets had increased to $312,000 and liabilities were $87,000. Calculate its return on assets: Multiple Choice 11.1%. 9.0%. 7.5%. 35.7%. 26.0%.arrow_forward
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