Successful coping silla can be

Profit Margin, Investment Turnover, and Return on Investment

77julia77 [94]

Answer:

A) To calculate the company's return on investment we have to calculate the profit margin and the total asset turnover first:

Profit margin = net income / total sales

Profit margin = $13,200,000 / $82,500,000 = 0.16 x 100 = 16%

Total asset turnover = total sales / total assets

Total asset turnover = $82,500,000 / $5,000,000 = 16.5 x 100 = 1,650%

The DuPont formula for calculating return on investment is:

ROI = profit margin x total asset turnover

ROI = 0.16 x 16.5 = 2,64 x 100 = 264%

B) If expenses decrease by $350,000 then:

Profit margin = $13,550,000 / $82,500,000 = 0.1642 x 100 = 16.42%

Total asset turnover = $82,500,000 / $5,000,000 = 16.5 x 100 = 1,650%

ROI = 0.1642 x 16.5 = 2,71 x 100 = 271%

4 0

3 years ago

Kim's Bridal Shoppe has 10,200 shares of common stock outstanding at a price of $36 per share. It also has 215 shares of preferr

vitfil [10]

Answer:

26.43 %

Explanation:

The Capital Structure is based on the Market Weight of the Sources of Finance as shown below :

Equity market value = Number of shares × price/share

Equity market value = 10,200 × $36

Equity market value = $367,200

Current debt value = Number of bonds × price/bond

Current debt value = 520 × (1930)

Current debt value = $1,003,600

Preferred stock value = Number of shares × price/share

Preferred stock value = 215 × $87

Preferred stock value = $18,705

Total capital = Common equity value + Debt value + Preferred stock value

Total capital = $367,200 + $1,003,600 + $18,705

Total capital = $1,389,505

Weight of Equity = Equity value / Total capital

Weight of Equity = $367,200 / $1,389,505

Weight of Equity = 26.43 %

3 0

3 years ago

High-Low Method

svlad2 [7]

Answer:

Variable cost per unit= $50

Fixed costs= $900,000

Explanation:

Giving the following information:

Total Costs Units Produced

January $1,900,000 20,000 units

February 2,250,000 27,000

March 2,400,000 30,000

<u>To calculate the unitary variable cost and the fixed cost under the high-low method, we need to use the following formulas:</u>

<u></u>

Variable cost per unit= (Highest activity cost - Lowest activity cost)/ (Highest activity units - Lowest activity units)

Variable cost per unit= (2,400,000 - 1,900,000) / (30,000 - 20,000)

Variable cost per unit= $50

Fixed costs= Highest activity cost - (Variable cost per unit * HAU)

Fixed costs= 2,400,000 - (50*30,000)

Fixed costs= $900,000

Fixed costs= LAC - (Variable cost per unit* LAU)

Fixed costs= 1,900,000 - (50*20,000)

Fixed costs= $900,000

7 0

3 years ago

Clem is married and is a skilled carpenter. Clem's wife, Wanda, works part time as a substitute grade school teacher. Determine

natulia [17]

Answer:

a) Clem can deduct the $1,005 that he spent on tools and supplies. If they file their taxes jointly, they can also deduct the $4,570 spent on health insurance.

b) Both utilities and depreciation are deductible from their rental income = $1,750 + $1,225 = $2,975

c) The employer portion of self-employment taxes is deductible = $7,600. Wanda's social security payments are not deductible.

d) This a personal expense and it is not deductible.

7 0

3 years ago

1. A stock has an expected return of 10.2 percent, the risk-free rate is 4.1 percent, and the market risk premium is 7.2 percent

NNADVOKAT [17]

Answer:

Beta is 0.85

Explanation:

The value of Beta can de derived from the CAPM formula of expected return

expected return=risk-free rate+Beta*market risk premium

expected return is 10.2%

risk-free rate is 4.10%

market risk premium is 7.2%

Beta is unknown

10.20%=4.10%+Beta*7.20%

10.20%-4.10%=Beta*7.20%

6.10% ==Beta*7.20%

Beta=6.10% /7.20%

Beta= 0.85

5 0

3 years ago