Analyzing accounting data for managerial decisions

Accounting data are used to analyze cash flows, and this analysis is critical for decision making. Consider the following case:

J&H Corp. recently hired Jeffrey. His immediate mandate was to analyze the company. He has to submit a report on the company's operational

efficiency and estimate potential investment in working capital. He has the income statement from last year and the following information from

the company's financial reports as well as some industry averages.

Last year, J&H Corp. reported a book value of $$600$ million in current assets, of which $35\%$ is cash, $37\%$ is short$-$term

investments, and the rest is accounts receivable and inventory.

The company reported $$510\mathrm{.}0$ million of current liabilities including accounts payable and accruals. Interestingly, the company

had no notes payable claims last year. There were no changes in the accounts payables during the reporting period.

The company, however, invested heavily in plant and equipment to support its operations. It reported a book value of $$960$

million in long$-$term assets last year.

Based on the information given to Jeffrey, he submits a report on January $1$ with some important calculations for management to use, both for

analysis and to devise an action plan. Which of the following statements in his report are true? Check all that apply.

Based on the information on industry averages, J&H Corp. would generate higher profits than the other players in the industry if all

players were of a similar size and had no debt or held no financial assets.

The firm uses $$828\mathrm{.}0$ million of total net operating capital to run the business.

J&H Corp. has $$222\mathrm{.}0$ million in nonoperating assets.

The company is using $-$ $$132\mathrm{.}0$ million in net operating working capital acquired by investor$-$supplied funds.

J&H Corp.$\text{'}$s NOPAT is $$278\mathrm{.}4$ million, which is lower than the industry average of $$348\mathrm{.}0$ million.