1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
zhannawk [14.2K]
2 years ago
14

Pacific Packaging's ROE last year was only 6%; but its management has developed a new operating plan that calls for a debt-to-ca

pital ratio of 40%, which will result in annual interest charges of $336,000. The firm has no plans to use preferred stock and total assets equal total invested capital. Management projects an EBIT of $560,000 on sales of $8,000,000, and it expects to have a total assets turnover ratio of 3.4. Under these conditions, the tax rate will be 30%. If the changes are made, what will be the company's return on equity
Business
1 answer:
Gre4nikov [31]2 years ago
6 0

Answer:

0.11%

Explanation:

Given that

Earning before interest and tax = $560,000

Interest = $336,000

The computation of company's return on equity is shown below:-

So, the Earning before tax

= $560,000 - $336,000

= $224,000

Tax = $224,000 × 30%

= $67,200

Earnings after interest and taxes = Earning before tax - Tax

= $224,000 - $67,200

= $156,800

Asset turnover ratio = total revenue ÷ total assets

3.4 = $8,000,000  ÷ total assets

Total assets = 2,352,941.18

Equity ratio = 1 - debt ratio

= 1 - 0.40

= 0.60

Total Equity = equity ratio × total assets

= 0.60 × 2,352,941.18

= 1,411,764.71

Return on Equity = Net income ÷ Equity

= $156,800 ÷ 1,411,764.71

= 0.11%

You might be interested in
The December 31, 2018, adjusted trial balance for Fightin' Blue Hens Corporation is presented below.Accounts Debit CreditCash $1
zepelin [54]

Answer:

These can be prepared as shown below:

Explanation:

1. Prepare a statement of stockholder equity for the year ends December 31, 2018, assuming no common stock was issued during 2018.

To do this, the income statement is first prepared by ignoring tax as follows:

Fightin' Blue Hens Corporation

Income Statement

for the year ended December 31, 2018.

Details                                                                    $

Service Revenue                                           300,000

Salaries Expense                                         (200,000)

Rent Expense                                                  (10,000)

Depreciation Expense                                   (20,000)

Interest Expense                                           <u>   (3,000) </u>

Earnings for the year                                   <u>   67,000 </u>

Therefore, we have:

Fightin' Blue Hens Corporation

Statement of Stockholder Equity

for the year ends December 31, 2018

Details                                                                    $

Common stock                                               100,000

Retained Earnings                                           40,000

Earnings for the year                                    <u>   67,000</u>

Stockholder Equity                                      <u> 207,000 </u>

2. Prepare a classified balance sheet as of December 31, 2018.

A balance sheet is a balance sheet that have different classifications suchas fixed assets, current assets and liabilities, long-term liabilities, and stockholder equity. This can be prepared as follows:

Fightin' Blue Hens Corporation

Classified Balance Sheet

for the year ends December 31, 2018

Details                                                          $                   $

<u>Fixed Assets</u>

Equipment                                           200,000

Accumulated Depreciation              <u>   (115,000) </u>    

Net Fixed Assets                                                          85,000  

<u>Current Assets</u>

Cash                                                        10,000

Accounts Receivable                           130,000

Prepaid Rent                                            4,000

Supplies                                               <u>  20,000 </u>

Total current assets                             164,000

<u>Current Liabilities</u>

Accounts Payable                                (10,000)

Salaries Payable                                    (9,000)

Interest Payable                                   <u>  (3,000) </u>

Working capital                                                            142,000

<u>Long-term Liabilities</u>

Notes Payable (due in two years)                              <u> (20,000) </u>

Net Total Assets                                                         <u> 207,000</u>

Financed by:

Common stock                                                              100,000

Retained Earnings                                                          40,000

Earnings for the year                                                   <u>   67,000</u>

Stockholder Equity                                                      <u> 207,000 </u>

Note: When a balance sheet is accurately prepared, the net total assets and the stockholder equity must be equal as above with both equaling $207,000.

6 0
3 years ago
phân tích các yếu tố cấu tạo nên người cung cấp dịch vụ khách hàng công thứ A B C. trong các yếu tố đó yếu tố nào quan trọng nhấ
Lorico [155]

Answer:

I would appreciate if my answer is chosen as a brainliest answer the

3 0
2 years ago
The combination of all the factors that consumers evaluate when deciding whether or not to buy a good or service is called
Montano1993 [528]
<span>The combination of all the factors that consumers evaluate when deciding whether or not to buy a good or service is called total product offer also known as a value package.

When a consumer evaluates something before they purchase, they want to make sure they are getting everything out of the item. It needs to fit their wants and needs and by evaluating the item consumers ac accurately decide if it is the right good or service for them.
</span>
6 0
3 years ago
Select all that apply. The accountant for Harper Plumbing Company failed to record the following transaction in the journal: Bil
satela [25.4K]

Answer:

A : Net income will be understated and

F. Assets will be understated on the balance sheet.

Explanation:

'Billed customers $1,400 for services performed' will be journalised as:

Cash A/c Dr to Sale/Income A/c Cr.

So; Not recording this transaction will understate the income & asset i.e cash. Income will be understated in the P&L A/C, assets will be understated in the Balance Sheet.

Other options are inapt because: Assets & Income overstatement are opposites of correct answer. Journal & ledger will be balanced because the entire entry is not recorded & its both debit & credit aspects have been omitted.

4 0
3 years ago
A company purchased factory equipment on April 1, 2013 for $80,000. It is estimated that the equipment will have an $10,000 salv
jarptica [38.1K]

Answer:

A.$5,250

Explanation:

=(80,000-10,000)/10=7,000*9/12=$5,250

The depreciation have been worked out on pro rata basis for 9 months starting from April 1st to 31 December 2013.

4 0
3 years ago
Read 2 more answers
Other questions:
  • A union election was held by the NLRB at Jaxon Industries, and 130 workers cast votes in the election. How many votes in favor o
    6·1 answer
  • A couple is required by their lender to have a down payment of 20% of the purchase price of the home they want to buy. if the co
    11·1 answer
  • Whatever the quality improvement approach, what key concept(s) is/are common between each approach?
    11·1 answer
  • Changes in nominal GDP over time ... Select one: a. ... reflect changes in the quantity of goods and services produced, their pr
    5·1 answer
  • Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data: The yield on the com
    15·1 answer
  • Palmona Co. establishes a $270 petty cash fund on January 1. On January 8, the fund shows $181 in cash along with receipts for t
    9·1 answer
  • The ​short-run effect of consumers becoming more pessimistic will be for the
    9·1 answer
  • More businesses and organizations, such as Amazon, Uber, MTA, an airline industry, professional sport organizations such as MLB
    8·1 answer
  • An increase in the supply of grain will reduce the total revenue grain producers receive if.
    14·1 answer
  • When calculating loan payments, to show a down payment toward the purchase of an asset, you must adjust the __________ argument
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!