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Andrew [12]
2 years ago
8

Discount Outlet has net income of $389,100, a profit margin of 2.8 percent, and a return on assets of 8.6 percent. What is the c

apital intensity ratio
Business
1 answer:
Ratling [72]2 years ago
5 0

An efficiency ratio known as the capital intensity ratio provides valuable insight into a company's financial situation.

Capital Intensity Ratio = Total Assets/Total Revenue

Return on assets = Net income/Total Assets

Total Assets = Net income/Return on Assets= $389,100/0.086

Total Revenue = Net income/Net Profit Margin = $389,100/0.028

Capital intensity ratio = ($389,100 /0.086) / ($389,100 / 0.028) =0.33

This ratio reveals how much capital or other resources a company has to have in order to make single dollar in sales. This ratio is the inverse of the asset turnover ratio, making it simple to calculate the capital intensity ratio if you already know the asset turnover ratio. For all capital-intensive firms, we require a good or higher capital intensity ratio. A company that invests a significant amount of capital in its manufacturing process is said to be capital-intensive. E.g., Power generating facilities. A company that has made significant investments in assets to generate income has a high capital intensity ratio (CIR). A company with a low CIR is able to produce larger revenues while owning fewer assets. As a result, businesses can use this ratio to modify their capital budgeting and planning.

Learn more about Capital Intensity Ratio here

brainly.com/question/14594640

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3 years ago
Last week john got a call from his contact eric at alpine telecomm in switzerland, one of his company's largest international cu
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7 0
4 years ago
Patrick Corporation is authorized to issue 1,000,000 shares of $1 par value common stock. During 2014, the company has the follo
gavmur [86]

Answer:

cash   4,900,000 debit

   common stock              700,000 credit

   additional paid-in        4,200,000 credit

   in excess of Par-value

treasury stock:   360,000 debit

      cash                      360,000 credit

dividends     340,000 debit

   dividends payable        340,000 credit

Explanation:

cash proceeds: 700,000  x 7 = 4,900,000

common stock: 700,000  x 1  =    700,000

additional paid-in:  (difference)           4,200,00

treasury stock: 20,000 x 18 = 360,000

outstanding shares: 700,000 - 20,000 = 680,000

cash dividends: 680,000 x 0.50 = 340,000

6 0
3 years ago
Deep Water Mining added $411 to retained earnings last year on sales of $24,646. The administrative expenses were $4,370, deprec
ki77a [65]

Answer:

$18,290

Explanation:

The computation of the cost of goods sold is given below;

The profit after tax is

= Retained earnings + dividend

= $411 + $285

= $696

The profit before tax = $696 ÷ (1 - Tax rate)

= $696 ÷ (1 - 0.35)

= $1,071  

Now  

Sales = $24,646

Let us assume the Cost of goods sold be X

admin expenses = $4,370

Depreciation = $812

Interest = $103

Profit before tax = $1.071

Cost of goods sold (X) = $24,646  - $4,370 - $812 - $103 - $1,071

= $18,290

5 0
3 years ago
You invest in a project that has a depreciable asset. The asset is depreciable under the 5year MACRS category. The depreciation
Juli2301 [7.4K]

Answer:

$28,800

Explanation:

Data provided in the question:

The asset is depreciable under the 5 year MACRS category

Depreciation percentages for all six years are:

0.20, 0.32, 0.192, 0.115, 0.115, 0.058

Worth of the asset = $150,000

Now,

Depreciation to be claimed in the year 3 will be

= Worth of the asset × Depreciation percentages for the year 3

here, from the given percentages of the depreciation

the Depreciation percentages for the year 3 is 0.192

= $150,000 × 0.192

= $28,800

7 0
3 years ago
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