WEEK TWO

1. (Evaluating profitability) The Malia Corporation had sales in 2015 of $63 million, total assets of $48 million, and total liabilities of $16 million. The interest rate on the company's debt is 6.2 percent and its tax rate is 30 percent. The operating profit margin was 11.9 percent. What were the company's operating income and net income? What was the operating return on assets and return on equity? Assume that interest must be paid on all of the debt.

The operating income was

ANSWER: $ (Round to the nearest dollar.)

The net income was

ANSWER: $ (Round to the nearest dollar.)

The operating return on assets was

ANSWER: $ (Round to one decimal place.)

The return on equity was

ANSWER: (Round to one decimal place.)

2. (Evaluating liquidity) The Tabor Sales Company had a gross profit margin (gross profits divided by sales) of 30.4 percent and sales of $9.6 million last year. Seventy-five percent of the firm's sales are on credit and the remainder are cash sales. Tabor's current assets equal $2.5 million, its current liabilities equal $287,000 and it has $99,000 in cash plus marketable securities.

a. If Tabor's accounts receivable are $562,500. what is its average collection period? ANSWER: (Round to two decimal places.)

b. If Tabor reduces its average collection period to 20 days, what will be its new level of accounts receivable? ANSWER: (Round to the nearest dollar.)

c. Tabor's inventory turnover ratio is 9.3 times. What is the level of Tabor's inventories? ANSWER: (Round to the nearest dollar.)

3. (Economic value added) Drew Concrete uses Economic Value Added as a financial performance measure. Drew has $230 million in assets, and the firm has financed its assets with 45% equity and 55% debt with an interest rate of 99%. The firm's opportunity cost on its funds is 13%, while the operating return on the firm's assets is 16%.

a. What is the Economic Value Added created or destroyed by Drew Concrete?

b. What does Economic Value Added measure?

a. What is the Economic Value Added (EVA) created or destroyed by Drew Concrete? Enter a positive number for EVA created or a negative number for EVA destroyed. ANSWER: million (Round to one decimal place.)

PLEASE ANSWER EACH QUESTION CORRECTLY AND FULLY!!!