Lemon Auto Wholesalers had sales of
a. Compute earnings after taxes.
b. Assume the firm hires Ms. Carr, an efficiency expert, as a consultant. She suggests that by increasing selling and administrative expenses to 14 percent of sales, sales can be increased to
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- Hydro Systems Engineering Associates, Inc., provides consulting services to city water authorities. The consulting firm’s contribution-margin ratio is 15 percent, and its annual fixed expenses are $245,000. The firm’s income-tax rate is 30 percent.a. Calculate the firm’s break-even volume of service revenue.b. How much before-tax income must the firm earn to make an after-tax net income of $138,000?c. What level of revenue for consulting services must the firm generate to earn an after-tax net income of $138,000?d. Suppose the firm’s income-tax rate changes to 20 percent. What will happen to the break-even level of consulting service revenue?arrow_forward1. If the company want to achieve target net income $800,000 and the tax rate is 30%, calculate how many units to be sold to achieve those targets? 2. The owner estimates that if he can spend an additional $75,000 towards sales promotion,sales in unit may increase by 30%. What should Mr. Budi’ decision be?arrow_forwardYou are doing some financial analysis research for your work and managed to get (incomplete) data. You will use this data to deduce the required information. You can assume 365 days in a year. a) Alpha Co. reported a cost of goods sold of $64,380.00 and an accounts payable balance of $16,700.00 last year. Compute the average time taken to pay suppliers. Discuss the significance of a longdays’ costs in payables for the firm. b) Bravo Ltd. equity multiplier is 1.93, its total asset turnover is 2.65, and its profit margin is 4.20 percent. Compute the Return on Equity (ROE). Explain the impact on ROE, should the total asset turnover decline next year. c) Charlie Inc. has a profit margin of 7.90 percent, a total asset turnover of 1.54, and a Return on Equity (ROE) of 13.47 percent. Solve for the debt-equity ratio. d) Delta GMBH’s ROE is 8.9 percent. Sales are $2,956,000.00. Total debt ratio is 0.3743. Total debt is $964,000.00. Determine the return on assets (ROA).arrow_forward
- Management would like to achieve a target profit after taxes of $300,000. The company’s income tax rate is 25 percent. What target profit before taxes is required to achieve the $300,000 after-tax?arrow_forwardThe owner of a bicycle repair shop forecasts revenues of $172,000 a year. Variable costs will be $53,000, and rental costs for the shop are $33,000 a year. Depreciation on the repair tools will be $13,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Now calculate the operating cash flow. Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shieldarrow_forwardTurtle is the manager of the Home Care Products Division of Care Corporation. As a manager of an investment center, Turtle's performance is measured using the residual income method. For the coming year, Turtle wants to achieve a residual income target of P100,000 using an imputed interest charge of 20%. Other forecasted figures for the coming year are as follows: Working Capital Plant and equipment Costs and expenses P90,000 860,000 1,210,000 How much should revenues be next year to achieve the residual income target? 1,482,000 1,464,000 1,300,000 1,500,000arrow_forward
- MBI Incorporated had sales of $35 million for fiscal 2022. The company's gross profit ratio for that year was 26%. Required: a. Calculate the gross profit and cost of goods sold for MBI for fiscal 2022. b. Assume that a new product is developed and that it will cost $469 to manufacture. Calculate the selling price that must be set for this new product if its gross profit ratio is to be the same as the average achieved for all products for fiscal 2022. c. From a management viewpoint, it could use the estimated selling price as a "target" in conducting marketing research studies to assess its ultimate prospects for success at this price. Complete this question by entering your answers in the tabs below. Required A Required B Required C From a management viewpoint, it could use the estimated selling price as a "target" in conducting marketing research studies to assess its ultimate prospects for success at this price.arrow_forwardThe owner of a bicycle repair shop forecasts revenues of $160,000 a year. Variable costs will be $50,000, and rental costs for the shop are $30,000 a year. Depreciation on the repair tools will be $10,000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20%. b. Calculate the operating cash flow for the repair shop using the three methods given below: Dollars in minus dollars out. Adjusted accounting profits. Add back depreciation tax shield.arrow_forwardThe owner of a bicycle repair shop forecasts revenues of $196,000 a year. Variable costs will be $59.000, and rental costs for the shop are $39.000 a year. Depreciation on the repair tools will be $19.000. a. Prepare an income statement for the shop based on these estimates. The tax rate is 20% Calculate the operating cash flow for the repair shop using the three methods given below Now calculate the operating cash flow 1. Dollars in minus dollars out 2. Adjusted accounting profits, in 3.Add back depreciation tax shieldarrow_forward
- Flamengo Co is a sporting goods manufacturing company. Last year, report the following information: Sales S700,000 Cost of goods sold $130,000 Selling and administrative expense $260,000 At the beginning of the year, the value of operating assets was $800,000. At the end of the year, the value of operating assets was $1,200,000. Flamengo- Co. requires a minimum rate of return of 15%. Calculate the Margin. Round all numbers to two decimal places. Do not answer as a percentage. For example, if the Margin is 17.63%, you should type 0.18.arrow_forwardWestern Repair Shop has a monthly target operating income of $50,000. Variable expenses are 55% of sales and monthly fixed expenses are $9,600. Requirements 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. 2. Express Western Repair Shop's margin of safety as a percentage of target sales. 3. What is Western Repair Shop's operating leverage factor at the target level of operating income? 4. Assume that the repair shop reaches its target. By what percentage will Western Repair Shop's operating income fall if sales volume declines by 16%? Requirement 1. Compute the monthly margin of safety in dollars if the shop achieves its income goal. Begin by identifying the formula to compute the margin of safety. Target sales in dollars Margin of safety in dollars The margin of safety is $. (Round interim calculations up to the nearest whole dollar and your final answer up to the nearest whole dollar.) Break-even sales in dollars =arrow_forwardTally Corp. sells tax software to aid individuals in completing their state and federal tax returns. During the current year, 11,000 software packages were sold resulting in $440,000 of sales revenue, $135,000 of variable costs, and $52,000 of fixed costs. If sales increase by $100,000: Total variable costs will Increase/decrease/stay the same by $ Total fixed costs will Increase/decrease/stay the same by $ Operating income will Increase/decrease/stay the same by $arrow_forward
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