This problem continues the Piedmont Computer Company situation from Chapter 23. Piedmont Computer Company reported 2020 sales of $3,600,000 and operating income of $183,600. Average total assets during 2020 were $600,000. Piedmont Computer Company’s target
Calculate Piedmont Computer Company’s profit margin ratio, asset turnover ratio,
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- The following tables summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) Sales $ 1,120 (40% of average assets)a Costs 840 (75% of sales) Interest 26 (5% of debt at start of year)b Pretax profit $ 254 Tax 101 (40% of pretax profit) Net income $ 152 a Assets at the end of 2018 were $2,700,000. b Debt at the end of 2018 was $530,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) Assets $ 2,900 Debt $ 530 Equity 2,370 Total $ 2,900 $ 2,900 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the…arrow_forwardMVV has the following data on its 2020 financial statement Total sales 2,000,000 Profit 360,000 Beginning total sales Ending total sales 1,500,000 2,100,000 What is the Return on Investment (ROI) of the MVV?arrow_forwardThe following tables summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.55. Interest is forecasted at 5% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) Sales $ 2,365 (55% of average assets)a Costs 1,419 (60% of sales) Interest 34 (5% of debt at start of year)b Pretax profit $ 912 Tax 365 (40% of pretax profit) Net income $ 547 a Assets at the end of 2018 were $4,200,000. b Debt at the end of 2018 was $680,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) Assets $ 4,400 Debt $ 680 Equity 3,720 Total $ 4,400 $ 4,400 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) My answer is…arrow_forward
- The table given below summarizes the 2019 income statement and end-year balance sheet of Drake’s Bowling Alleys. Drake’s financial manager forecasts a 10% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.40. Interest is forecasted at 5% of debt at the start of the year. Income Statement $ in thousands Sales $ 2,600 (40% of average assets)a Costs 1,950 (75% of sales) Interest 105 (5% of debt at start of year)b Pretax profit 545 Tax 218 (40% of pretax profit) Net income $ 327 aAssets at the end of 2018 were $6,240,000. bDebt at the end of 2018 was $2,100,000. Balance Sheet $ in thousands Net assets $ 6,760 Debt $ 2,100 Equity 4,660 Total $ 6,760 Total $ 6,760 a. What is the implied level of assets at the end of 2020? (Enter your answer in dollars not in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake need…arrow_forwardSuppose a firm has had the following historic sales figures. What would be the forecast for next year's sales using the average approach? You must use the built-in Excel function to answer this question. Input area: Year Sales 2016 2017 2018 es es e $ 1,500,000 $ 1,750,000 $ 1,400,000 2019 $ 2,000,000 2020 $ 1,600,000 Output area: Next year's salesarrow_forwardThe following tables summarizes the 2019 income statement and end-year balance sheet of Drake's Bowling Alleys. Drake's financial manager forecasts a 20% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.50. Interest is forecasted at 4% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) $2,050 (50% of average assets)ª 1,230 (60% of sales) Sales a Costs b Interest 26 (4% of debt at start of year) Pretax profit $ 794 238 (30% of pretax profit) $ Таx Net income 556 a Assets at the end of 2018 were $4,000,000. Debt at the end of 2018 was $660,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) $ 4,200 Debt $ 3,540 Assets 660 Equity Total $4,200 $4,200 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake's need to raise in the capital markets…arrow_forward
- The financial statements of Eagle Sport Supply are shown in the table below. For simplicity, "Costs" include interest. Assume that Eagle's assets are proportional to its sales. Assume a growth rate of 30% in revenue, expenses, and assets in 2020. The tax rate will remain constant. Income Statement Sales Costs Pretax income Taxes (at 40.0%) Net income 2019 Net assets $5,400 Total $3,350 1,450 $1,900 760 $1,140 Balance Sheet, Year-End 2018 $5,100 $5,400 $5,100 2019 $2,200 3,200 Debt Equity Total $5,400 6.42 x % a. Assume that the dividend payout ratio is fixed at 50% and the equity-to-asset ratio is fixed. What is the internal growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) X Answer is complete but not entirely correct. Internal growth rate 2018 $2,100 3,000 $ 5,100 b. What is the sustainable growth rate for 2020? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal…arrow_forwardThe following tables summarizes the 2019 income statement and end-year balance sheet of Drake's Bowling Alleys. Drake's financial manager forecasts a 15% increase in sales and costs in 2020. The ratio of sales to average assets is expected to remain at 0.50. Interest is forecasted at 3% of debt at the start of the year. INCOME STATEMENT, 2019 (Figures in $ thousands) $2,100 (50% of average assets)ª 1,050 (50% of sales) Sales a Costs Interest 20 (3% of debt at start of year)º Pretax profit $1,030 206 (20% of pretax profit) $ Таx Net income 824 a Assets at the end of 2018 were $4,100,000. Debt at the end of 2018 was $670,000. BALANCE SHEET, YEAR-END (Figures in $ thousands) $ 4,300 $ 3,630 Assets Debt 670 Equity Total $4,300 $4,300 a. What is the implied level of assets at the end of 2020? (Do not round your intermediate calculations. Enter your answer in thousands.) b. If the company pays out 50% of net income as dividends, how much cash will Drake's need to raise in the capital markets…arrow_forwardDuring 2024, its first year of operations, Hollis Industries recorded sales of $11,800,000 and experienced returns of $750,000. Cost of goods sold totaled $8,850,000 (75% of sales). The company estimates that 8% of all sales will be returned. How much net revenue will Hollis Industries report at the end of its first year of operations? Net revenue:arrow_forward
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