Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Detecting Accounting Fraud Analysis And Ethics

Authors: Cecil Jackson

1st Edition

0133078604, 9780133078602

More Books

Students also viewed these Accounting questions

Question

Describe Montaignes position on child rearing.

Answered: 1 week ago

Question

Do not pay him, wait until I come

Answered: 1 week ago

Question

Do not get married, wait until I come, etc.

Answered: 1 week ago

Question

Do not come to the conclusion too quickly

Answered: 1 week ago