Question
Jane Doe is a private company which a management accountant is analyzing its performance. So it is trying to look at different components that are
Jane Doe is a private company which a management accountant is analyzing its performance. So it is trying to look at different components that are distributing to its success. The tests he wants to carry out are the following using the table below:
| Current liabilities | 14500 |
| Notes payable | 55600 |
| Equity | 250000 |
| Total Assets | ? |
| Tax rate | 30% |
| Net income | 19500 |
| Research and Development | $7200 |
| Training expenses for employees | $6700 |
| Sales | 56200 |
| Interest on debt | 8% |
| Risk free rate | 4% |
| Market return | 9% |
| Beta | 1.8 |
REQUIRED
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Calculate interest expense, tax and EBIT
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Calculate the total capital employed of the company.
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Calculate weighted average cost of capital.
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What is the EVA of the company?
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Calculate Residual Income.
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What are the major advantages of using EVA to evaluate performance
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
5th Canadian edition
978-1118024492
