The Bedding Division of Homestore Corporation had sales of $9,000,000 and operating income of $1,620,000 last year. The total assets of the Bedding Division were $2,500,000, while current liabilitieswere $310,000. Homestore Corporation's target rate of return is 11%, while its weighted average cost of capital is 9%. The effective tax rate for the company is 25%.What is the Bedding Division's capital turnover?OA. 29OB. 3.6OC. 8.1O D. 5.6(...)

Given, Sales= $9,000,000 Operating Income =$1,620,000 Total Assets =$2,500,000 Current Liabilities…

Answered: The Bedding Division of Homestore…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter12: Balanced Scorecard And Other Performance Measures

Section: Chapter Questions

Problem 4PB: Banyan Industries has two divisions, a tax rate of 30%, and a minimum rate of return of 20%....

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Banyan Industries has two divisions, a tax rate of 30%, and a minimum rate of return of 20%. Division A has a weighted average cost of Capital of 9.5% and is looking at a new project that will generate a profit of $1,200,000 from a machine that costs $4,000,000. Division B has a weighted average cost of capital of 9.5% and is looking at a new project that will generate a profit of $1,350,000 from a machine that costs $5,000.000. A. Calculate the EVA for each of Banyans divisions. B. Calculate the RI for each of Banyans division. C. If Banyan uses EVA to evaluate the projects, which division has the better project and by how much? D. If Banyan uses RI, which division has the better project and by how much? E. What are some of the reasons for the similarity or difference that you found in the use of EVA versus RI?
Barton Industries has operating income for the year of $3,600,000 and a 25% tax rate. Its total invested capital is $18,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA? Round your answer to the nearest dollar, if necessary. $
Last year Cole Furnaces had $5 million in operating income (EBIT). The company had a net depreciation expense of $1 million and an interest expense of $1 million; its corporate tax rate was 40%. The company has $14 million in operating current assets and $4 million in operating current liabilities; it has $15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole’s only noncash item was depreciation. Calculate net operating working capital for the current year Calculate total net operating capital for the current year If total net operating capital in the previous year was $24 million, what was the company’s free cash flow (FCF) for the year?
Last year, Jackson Tires reported net sales of $40,000,000 and total operating costs (including depreciation) of $26,000,000. Jackson Tires has $43,500,000 of investor-supplied capital, which has an after-tax cost of 7.5%. If Jackson Tires’s tax rate is 40%, how much value did its management create or lose for the firm during the year (rounded to the nearest whole dollar)? $22,837,500 $5,137,500 $20,737,500 $1,669,688
Macon Mills is a division of Bolin Products, Inc. During the most recent year, Macon had a net income of $39 million. Included in the income was interest expense of $3,300,000. The company's tax rate was 40%. Total assets were $475 million, current liabilities were $107,000,000, and $70,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon? Enter your answer in whole dollar. Round "ROI" answer to two decimal places. Invested Capital $fill in the blank 1 ROI fill in the blank 2%
Gabbert’s Corporation expects to have sales of $15 million. Costs other than depreciations are expected to be 77% of sales, and depreciation is expected to be $1.8 million. All sales revenues will be collected in cash, and costs other than depreciation must be paid for during the year. The federal tax rate is 25%. Interest expense is $210,000. 1. Set up an income statement. What is Gabbert’s expcted net income? Its expected net cash flow? 2. Suppose Congress changed the tax laws so that Gabbert’s depreciation expenses went up by 60%. No changes in operations occurred. What would happen to the reported profit and to net cash flow? 3. Now suppose that Congress changed the tax laws such that, instead of increasing Gabbert’s depreciation, it was reduced by 60%. How would the profit and the net cash flow be affected? 4. If this were your company, would you prefer Congress to cause your depreciation expense to be increased or reduced? Why?
The Anderson Corporation (an all-equity-financed firm) has a sales level of $300,000 with a 12 percent profit margin before interest and taxes. To generate this sales volume, the firm maintains a fixed-asset investment of $150,000. Currently, the firm maintains $50,000 in current assets. a) Determine the total asset turnover for the firm and compute the rate of return on total assets before taxes. b) Compute the before-tax rate of return on assets at different levels of current assets starting with $10,000 and increasing in $15,000 increments to $100,000. c) If the new current assets were financed with long-term debt at 15 percent interest, what would be the before-tax interest "cost" if the new current assets added equals $40,000?
Macon Mills is a division of Bolin Products, Inc. During the most recent year, Macon had a net income of $36 million. Included in the income was interest expense of $3,100,000. The company's tax rate was 40%. Total assets were $470 million, current liabilities were $102,000,000, and $73,000,000 of the current liabilities are noninterest bearing. What are the invested capital and ROI for Macon? Enter your answer in whole dollar. Round "ROI" answer to two decimal places.
Last year SG Corporation had P5 million in operating income (EBIT). The company had a net depreciation expense of P1 million and an interest expense of P1 million; its corporate tax rate was 40%. The company has P14 million in operating current assets and P4 million in operating current liabilities; it has P15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that SG's only noncash item was depreciation. If total net operating capital in the previous year was P24 million, what was the company’s free cash flow (FCF) for the year? Sample format: 1,111,111
Problem: Last year Cole Furnaces had $5 million in operating income (EBIT). The company had a net depreciation expense of $1 million and an interest expense of $1 million; its corporate tax rate was 40%. The company has $14 million in operating current assets and $4 million in operating current liabilities; it has $15 million in net plant and equipment. It estimates that it has an after-tax cost of capital of 10%. Assume that Cole’s only noncash item was depreciation. Calculate net operating working capital for the current year. Sample format: 11,111,111 Calculate total net operating capital for the current year. Sample format: 11,111,111 If total net operating capital in the previous year was $24 million, what was the company’s free cash flow (FCF) for the year? Sample format: 1,111,111
Barton Industries has operating income for the year of $3,500,000 and a 36% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 8%. What is the firm's EVA?
Laiho Industries recently reported the following information in its annual report: Net income = $7.0 million. NOPAT = $60 million. EBITDA = $120 million. Net profit margin = 5.0%.Laiho has depreciation expense, but it does not have amortization expense. Laiho has $300 million in operating capital, its after-tax cost of capital is 10 percent (that is, it’s WACC = 10%), and the firm’s tax rate is 40 percent.a. What is Laiho’s depreciation expense?b. What is Laiho’s interest expense?c. What is Laiho’s sales?d. What is Laiho’s EVA?

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