Only Part C:. "before the incestment the return on owners equity was (blank) %? & did the renovation have a favorable effect on the profitibility of the firm?
FIN-320-R2892 Principles of Finance 19EW2 Homework: 4-2 MyFinanceLab Assignment Score: 3.57 of 5 pts 11 of 12 (12 complete) P4-31 (similar to) (Financial statement analysis) The annual sales for Salco, Inc were $4.69 milion last year The firm's end-of-year balance sheet was as follows: Salco's income statement for th a. Calculate Salco's total asset turnover, operating profit margin, and operating return on assets. b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $1.03 million. The fiem will maintain its present debt ratio of 50 p will be the new operating return on assets ratio (i.e., net operating income-total assets) for Salco alter the plant's renovation? c. Given that the plant renovation in part (b) occurs and Salco's interest expense rises by $48.000 per vear, what will be the return earned on the common stockholders investment? Com profitability of the firm? a. Calculate Salco's total asset turnover, operating profit margin, and operating return on assets The company's total asset turnover is 2.34 times. (Round to two decimal places.) The company's operating profit margin is 14.4 % ( Round to one decimal place) The company's operating return on assets is 339 % (Round to one decimal place.) b. Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $1.03 million will be the new operating return on assets ratio (ie net operating income+ total assets) for Salco ater the plant's renovation? The firm will maintain its present debt ratio of 50 pe The company's new operating return on assets is 20.7%. ( Round to one decimal place.) c. Given that the plant renovation in part (b) occurs and Salco's interest expense rises by S48,000 per year, what will be the return eamed on the common stockholders' investment? The new return on owners' equity is 20.4% ( Round to one decimal place) Compare this rate of return with that eamed before the renovation Before the investment the return on owners equity was Round to one decimal place) Enter your answer in the answer box and then click Check Answer 1 part remaining iear All Type here to search efirm's end-of-year balance sheet was as follows: Salco's income statement for the year was as follows: plant and equipment of $1.03 million. The firm will maintain its present debt ratio of 50 percent when financing the new investment and expects sa after the plant's renovation? O per year, what will be the return earned on the common stockholders' investment? Compare this rate of return with that eamed before the renovat - X Data Table in plant and equipme co after the plant's ren e new investment and expects sales Sales $4,690,000 (3,503,000) Less: Cost of goods sold Gross profit Less: Operating expenses Net operating income $1,187,000 (509,000) $678.000 00 per year, what will Less: Interest expense (106,000) $572.000 Earnings before taxes Less: Taxes (35% ) (200,200) Net income $371,800 Print Done Ciear All -ar. The firm's end-of-year balance sheet was as follows: tm Salco's income statement for the year was as follows: ssets. ment in plant and equipment of $1.03 million. The firm will maintain its present debt ratio of 50 percent when financing the new investment and expects sales r Salco after the plant's renovation?" $48,000 per year, what will be the return earned on the common stockholders' investment? Compare this rate of return with that earned before the renovatior assets X and expects sales estment in for Salco a i Data Table ) $999,500 Liabilities $499,000 Current assets by $48,000 999,500 Owners' equity 1,500,000 Net fixed assets $1,999,000 Total $1.999.000 Total Assets Print Done place ) Clear Al
