The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111=1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it eaches full capacity. At the projected sales level of $1,250, it needs $1,250 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. 50, EFN is $565-225-$340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current ales are $805,500 and sales are projected to grow to $940,000. The current fixed assets are $775,000. in now fixed on quire to support this growth in sales? (Do not round

The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111=1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it eaches full capacity. At the projected sales level of $1,250, it needs $1,250 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. 50, EFN is $565-225-$340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current ales are $805,500 and sales are projected to grow to $940,000. The current fixed assets are $775,000. in now fixed on quire to support this growth in sales? (Do not round

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 3PB: The income statement comparison for Rush Delivery Company shows the income statement for the current...

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The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 = $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111 = 1.62 = This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, it needs $1,250 × 1.62 $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is $565 - 225 = $340. Blue Sky Manufacturing, Incorporated, is currently operating at 90 percent of fixed asset capacity. Current sales are $708,000 and sales are projected to grow to $920,000. The current fixed assets are $670,000. How much in new fixed assets is required to support this growth in…
The discussion of EFN in the chapter implicitly assumed that the company was operating at full capacity. Often, this is not the case. Assume that Rosengarten was operating at 90 percent capacity. Full-capacity sales would be $1,000/.90 = $1,111. The balance sheet shows $1,800 in fixed assets. The capital intensity ratio for the company is: Capital intensity ratio = Fixed assets/Full-capacity sales = $1,800/$1,111 = 1.62 This means that Rosengarten needs $1.62 in fixed assets for every dollar in sales when it reaches full capacity. At the projected sales level of $1,250, it needs $1,250 × 1.62 = $2,025 in fixed assets, which is $225 lower than our projection of $2,250 in fixed assets. So, EFN is $565 – 225 = $340. Blue Sky Mfg., Inc., is currently operating at 90 percent of fixed asset capacity. Current sales are $712,000 and sales are projected to grow to $930,000. The current fixed assets are $686,000. How much in new fixed assets is required…
Suppose a firm has the following information: Operatingcurrent assets = $2.7 million; operating current liabilities =$1.5 million; long-term bonds = $3 million; net plant andequipment = $7.8 million; and other long-term operating assets =$1 million. How much is tied up in net operating workingcapital (NOWC)? ($1.2 million) How much is tied up in total netoperating capital? ($10 million)
The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. A. Determine the operating income (loss) (dollars) for each year. B. Determine the operating income (percentage) for each year. C. The company made a strategic decision to invest in additional assets in the current year. These amounts are provided. Using the total assets amounts as the investment base, calculate the ROI. Was the decision to invest additional assets in the company successful? Explain. D. Assuming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in part C.
From the following information compute the residual income of Frannie Ltd. a) Reported Earnings = $2,000,000 b) Financed its capital structure with $1,000,000 worth of equity at a required rate of return of 10%.
What is the FCFF of a firm with revenues of $229 million, operating profit margin of 47%, tax rate of 22%, depreciation and amortization expense of $29 million, capital expenditures of $31 million, acquisition expenses of $9 million and change in net working capital of $11 million? Answer in millions, rounded to one decimal place (e.g., $245,684,235 = 245.7). (Assume non- operating income and expenses are zero, so that EBIT = Operating income.) Type your numeric answer and submit
Thickburger's net fixed assets = $200,000, total assets = $400,000, inventory =$50,000 and current liabilities = $100,000. All assets are classified as beingeither "current assets" or "fixed assets". What is the firm's current ratio?b. What is Thickburger's quick ratio?
An investment center of Stuart Corporation shows an operating income of $8,250 on total operating assets of $66,000. Required Compute the return on investment. (Round your answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Return on investment %
The activity ratios measure which of the following? Select one: O a the efficiency of the company's supply chain O b. the efficiency with which a company generates sales from its assets Oc the profitability of the company's activities Od the production efficiency of a company's fixed assets If the assumption of financial distress costs is added, then Modigliani and Miller (with taxes) predicts that the optimal capital structure is 100% debt Select one: O True O False
Consider the following data for the firms Acme and Apex: Equity ($ million) Debt ($ million) ROC Cost of Capital Acme 290 145 17% 9% Apex 1,450 483 15% 10% a. Calculate the economic value added for Acme and Apex (round to 2 decimal places). Economic value added for Acme $? million Economic value added for Apex $? million b. Calculate the economic value added per dollar of invested capital for Acme and Apex (round to 2 decimal places)? Economic value added for Acme per dollar Economic value added for Apex per dollar
Use the following information to find the external financing needed (EFN): Current sales: $6,000; Current costs: $4,000; Total Assets: $20,000; Total Debt: $8,000; Total equity: $12,000; Projected sales: $9,600. Total assets and costs are proportional to sales. The firm does not plan to distribute any dividends. The level of debt and equity is independent of the level of sales
Consider the following data for the firms Acme and Apex: Acme Apex Required: Equity Debt ($ million) ($ million) 210 1,050 105 350 ROC Cost of Capital (*) (%) 17% 9% 15% 10% a-1. Calculate the economic value added for Acme and Apex. a-2. Which firm has the higher economic value added? b-1. Calculate the economic value added per dollar of invested capital for Acme and Apex. b-2. Which firm has the higher economic value added per dollar of invested capital? Answer is not complete. Complete this question by entering your answers in the tabs below. Required A1 Required A2 Required B1 Required B2 Calculate the economic value added for Acme and Apex. Note: Enter your answers in millions rounded to 2 decimal places. Economic value added for Acme million Economic value added for Apex million