Fundamentals of Corporate Finance
11th Edition
ISBN: 9780077861704
Author: Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Bradford D Jordan Professor
Publisher: McGraw-Hill Education
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Chapter 2, Problem 9QP
Calculating Additions to NWC [LO4] The 2014
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Find online the annual 10-K report for Costco Wholesale Corporation (COST) for fiscal year 2015 (filed in October 2015).
a. Compute Costco's net profit margin, total asset turnover, and equity multiplier.
b. Verify the DuPont Identity for Costco's ROE.
c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be?
a. Compute Costco's net profit margin, total asset turnover, and equity multiplier.
The net profit margin is
%. (Round to two decimal places.)
The total asset turnover is
(Round to two decimal places.)
The equity multiplier is
(Round to two decimal places.)
b. Verify the DuPont Identity forCostco's ROE.
The ROE is %. (Round to two decimal places.)
c. If Costco's managers wanted to increase its ROE by 1 percentage point, how much higher would their asset turnover need to be?
The total assets turnover should be
(Round to two decimal places.)
The total asset turnover should be
%
(Round to two decimal places and…
10. Doric Co. reported the following items on its 2025 financial statements:
View the items.
Determine Doric Co.'s rate of return on total assets for 2025.
Select the formula, then enter the amounts to compute the rate of return on total assets for 2025. (Round your answer to the nearest percent, X%.)
+
+
÷
Items
=
Rate of return on total assets
%
Total Assets, December 31, 2025
32,000
Total Assets, December 31, 2024
6,000
For Year Ended December 31, 2025:
Interest Expense
600
Net Income
900
Print
Done
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☑
Calculate return on assets and profit margin.LO9
The following information is available for Ware Ltd for 2018: sales revenue $7 840 000; cost of sales $3 528 000; profit $1 176 000; total equity $2 233 300; average total assets $5 113 000. Calculate the return on assets and profit margin for Ware Ltd for 2018.
Chapter 2 Solutions
Fundamentals of Corporate Finance
Ch. 2.1 - Prob. 2.1ACQCh. 2.1 - What is liquidity? Why is it important?Ch. 2.1 - What do we mean by financial leverage?Ch. 2.1 - Explain the difference between accounting value...Ch. 2.2 - What is the income statement equation?Ch. 2.2 - Prob. 2.2BCQCh. 2.2 - Why is accounting income not the same as cash...Ch. 2.3 - What is the difference between a marginal and an...Ch. 2.3 - Do the wealthiest corporations receive a tax break...Ch. 2.4 - Prob. 2.4ACQ
Ch. 2.4 - Prob. 2.4BCQCh. 2.4 - Why is interest paid not a component of operating...Ch. 2 - What types of accounts are the most liquid?Ch. 2 - What is an example of a noncash expense?Ch. 2 - The marginal tax rate is the tax rate which...Ch. 2 - Prob. 2.4CTFCh. 2 - Prob. 1CRCTCh. 2 - Accounting and Cash flows [LO2] Why might the...Ch. 2 - Prob. 3CRCTCh. 2 - Operating Cash Flow [LO2] In comparing accounting...Ch. 2 - Prob. 5CRCTCh. 2 - Cash Flow from Assets [LO4] Suppose a companys...Ch. 2 - Prob. 7CRCTCh. 2 - Net Working Capital and Capital Spending [LO4]...Ch. 2 - Prob. 9CRCTCh. 2 - Prob. 10CRCTCh. 2 - Prob. 11CRCTCh. 2 - Earnings Management [LO2] Companies often try to...Ch. 2 - Building a Balance Sheet [LO1] KCCO, Inc., has...Ch. 2 - Building an Income Statement [LO1] Billys...Ch. 2 - Dividends and Retained Earnings [LO1] Suppose the...Ch. 2 - Prob. 4QPCh. 2 - Calculating Taxes [LO3] The Dyrdek Co. had 267,000...Ch. 2 - Prob. 6QPCh. 2 - Calculating OCF [LO4] Ridiculousness, Inc., has...Ch. 2 - Calculating Net Capital Spending [LO4] Bowyer...Ch. 2 - Calculating Additions to NWC [LO4] The 2014...Ch. 2 - Cash Flow to Creditors [LO4] The 2014 balance...Ch. 2 - Cash Flow to Stockholders [LO4] The 2014 balance...Ch. 2 - Prob. 12QPCh. 2 - Market Values and Book Values [LO1] Klingon...Ch. 2 - Prob. 14QPCh. 2 - Using Income Statements [LO1] Given the following...Ch. 2 - Preparing a Balance Sheet [LO1] Prepare a 2015...Ch. 2 - Prob. 17QPCh. 2 - Prob. 18QPCh. 2 - Net Income and OCF [LO2] During 2014, Raines...Ch. 2 - Prob. 20QPCh. 2 - Prob. 21QPCh. 2 - Calculating Cash Flows [LO4] Consider the...Ch. 2 - Net Fixed Assets and Depreciation [LO4] On the...Ch. 2 - Prob. 24QPCh. 2 - Use the following information for Taco Swell,...Ch. 2 - Use the following information for Taco Swell,...Ch. 2 - Prob. 1MCh. 2 - Prob. 2M
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- Coronado Incorporated had average total assets in 2025 of $6345000. It reported sales for of $8217000 that year. Average liabilities for the year were $5199000. Net income for the year was $958095. What is Coronado' return on assets for 2025? O 15.10 % O 18.43% O 6.52% O 11.66%arrow_forward12.1 Middletown clinic had total assets of $500,000 and an equity balance of $350,000 at the end of 2015. One year later at the end of 2016 the clinic had $575,000 in assets and$380,000 in equity. What was the clinic dollar growth in assets during 2016 and how was this growth financed?arrow_forwardTarget in 2017 reported net income of $2,934 billion, net sales of $71,879 billion, and average total assets of $38,215 billion. What is Target’s asset turnover? What is Target’s return on assets?arrow_forward
- Additional information: Depreciation (2018): R483. The firm spent R250m in profitable projects during the course of 2018 • WACC : 15% • Cost of equity of the firm: 10% Таx rate : 40% Table 2: FBC statement of comprehensive income (R millions except for share data) 2018 2017 Total revenues R3 175 R3 075 ЕBIT 495 448 Interest expense 104 101 Net Income 235 208 Dividends per share R0.80 R0.80 Use the information given, to answer the following: a) Calculate the Free Cash Flow to the Firm (FCFF) for the year 2018. b) You are told that the Free Cash Flow to Equity (FCFE) of the firm will continue to grow at a rate of 5% for the next 3 years, after which it will stabilize to a rate of 3%. Calculate the intrinsic value of each of FBC' shares. 9 (Use 2.d.p in your calculations & final answer for this question)arrow_forwardPrevious Nex You are a financial Manager of Chevron Corp You need to assess the effectiveness of working capital management.of the company for 2018 using the following data What is th 2018 Payable turnover? 2017 Accoun Receivable 15 353 000 2018 Account Receivable 15,050 000 2017 Inventory = 5 585 000 2018 Inventory = 5 704.000 2017 Accounts Payable = 14 565.000 2018 Accounts Payable = 13 953 000 2017 Sales = 134 674 000 2018 Sales = 158 902.000 2017 Cost of Sales = 96 114.000 2018 Cost of Sales = 113 997 000 2017 Purchases = 95 114 000 2018 Purchases 123 435.000arrow_forwardQuestion Description Use the table below to answer the questions. 2014 Sales COGS Interest Depreciation Cash Accounts receivables Current liabilities Inventory Long-term debt Net fixed assets Shareholder's equity Taxes $6,318 3.945 303 1,204 672 601 414 1,215 4,780 7,700 4,994 217 1. What is the change in net working capital from 2014 to 2015? 2. What is the net capital spending for 2015? 2015 $7,202 4,460 277 1,196 418 578 463 1,598 4,103 7,330 5.358 317arrow_forward
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