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For each of the four firms below (CAT, DOG, FERRET, and ALPACA), use the given values to solve for the missing values. Notes: We are
For each of the four firms below (CAT, DOG, FERRET, and ALPACA), use the given values to solve for the missing values.
Notes: We are equating ROA and ROI in this problem; see page 1090 of your text. You may assume that balances for total assets, etc. are averages, when necessary, and that sales are net sales. Assume that "invested capital" = total assets. Assume that the tax rate for all firms is 20%, and that the weighted average cost of capital is the minimum acceptable return.
CAT | DOG | FERRET | ALPACA | ||||
Sales | $200,000 | $1,750,000 | |||||
COGS | $125,000 | $300,000 | $750,000 | ||||
operating income | $50,000 | $50,000 | |||||
operating expenses | $150,000 | $80,000 | $150,000 | ||||
net income | $60,000 | $475,000 | $300,000 | ||||
current assets | $75,000 | $250,000 | |||||
current liabilities | $150,000 | $500,000 | |||||
total assets | $700,000 | $3,500,000 | |||||
total liabilities | $700,000 | $1,000,000 | |||||
debt ratio | 0.500 | 0.700 | 0.575 | ||||
working capital | $15,000 | $300,000 | |||||
current ratio | 0.750 | ||||||
gross profit rate (gross profit margin) | 0.400 | 0.486 | 0.375 | ||||
ROA (ROI) | 0.050 | 0.220 | 0.150 | ||||
ROE | 0.283 | 0.353 | |||||
return on sales (ROS) | 0.100 | 0.250 | |||||
capital turnover | 0.600 | ||||||
residual income (RI) | $120,000 | ||||||
EVA | ($62,000) | $121,000 | |||||
weighted average cost of capital | 0.100 | 0.150 |
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