Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

hi there I really need your help with this Question 5 (11 marks) a) The income statement comparison for Rush Delivery Company shows the income

hi there I really need your help with this

image text in transcribed
Question 5 (11 marks) a) The income statement comparison for Rush Delivery Company shows the income statement for the current and prior year. Current Year Prior Year {Amounts in thousands} Sales Cost of goods sold Gross prot Wages Utilities Repairs Selllng Total expenses $1 5,000 9,750 $5.250 53.900 300 75 225 $4,500 $1 1 .000 7,480 $3.520 $3,080 250 325 200 $3,855 Operating income-moss] Operating incomeloss] 95 Total assets (investment base} Return on investment Residual income (8% cost of capital) Required: a) Determine the operating income {loss} for each year. (2 marks] b} Determine the operating income (96 of sales) for each year. (2 marks) 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. (3.5 marks] d} A55uming an 8% cost of capital, calculate the RI for each year. Explain how this compares to your findings in (c). (3.5 marks) SHOW YOUR WORKING

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Intermediate Accounting

Authors: James D. Stice, Earl K. Stice, Fred Skousen

16th Edition

324376375, 0324375743I, 978-0324376371, 9780324375749, 978-0324312140

Students also viewed these Accounting questions