Financial Accounting
4th Edition
ISBN: 9781259307959
Author: J. David Spiceland, Wayne M Thomas, Don Herrmann
Publisher: McGraw-Hill Education
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Chapter 4, Problem 4.20E
To determine
To Predict: The company with higher cash to non-cash asset ratio at the end of year 3.
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Students have asked these similar questions
For the year ended December 31, 2022, Settles Incorporated earned an ROI of 8.8 %. Sales for the year were $9 million, and average
asset turnover was 2.2. Average stockholders' equity was $2.9 million.
Required:
a. Calculate Settles Incorporated's margin and net income.
Note: Round "Margin" answer to 1 decimal place. Enter the net income answer in dollars, i.e., $5 million should be entered as
5,000,000.
b. Calculate Settles Incorporated's return on equity.
Note: Round your answer to 1 decimal place.
a. Margin
a. Net income
%
b. Return on equity
%
Brans Co. is considering a $270,000 investment, which will provide net returns of $110,000, $140,000,
and $220,000 in the second, third, and fourth yearS, respectively.
The company has a payback rule of 3 years. Should the company undertake the investment?
Use the following table:
Cumulative Cash
Flow
Cash
Cash
Net Cash
Year
Outflow
Inflow
Flow
a. No
O b. Yes
Use the following information for numbers 23 to 25:
Corporate Valuators, Inc. is assessing the value of two companies, Capital Corp. and Earm, Inc. which projects the following
net cash flows in the next five years, with its desired required rate of return. Net cash flows approximate to be its earnings
also. The balance sheet of Capital Corp. and Eam, Inc. has recorded Property, Plant and Equipment of P100 million and
P200 million, respectively. Operating assets are estimated at 80% and 70% respectively and the rest are considered idle.
Capital Corp.
8,000,000
8,800,000
9,680,000
10,648,000
11,712,800
Required return 8%
Net cash flows Net cash flows
Earn, Inc.
9,600,000
10,560,000
11,616,000
12,777,000
14,055,3
6%
Year
1
2
3
4
23. Using capitalization of earnings, compute for the equity value of Capital Corp.
24. Using capitalization of earnings, compute for the equity value of Eam, Inc.
25. Which company has higher equity value?
Chapter 4 Solutions
Financial Accounting
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - What is meant by the fraud triangle, and what can...Ch. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - What is meant by separation of duties?Ch. 4 - Prob. 10RQ
Ch. 4 - Prob. 11RQCh. 4 - Prob. 12RQCh. 4 - Prob. 13RQCh. 4 - Prob. 14RQCh. 4 - Prob. 15RQCh. 4 - Prob. 16RQCh. 4 - Prob. 17RQCh. 4 - Prob. 18RQCh. 4 - Prob. 19RQCh. 4 - Prob. 20RQCh. 4 - Prob. 21RQCh. 4 - 22.What are two primary reasons that the companys...Ch. 4 - Prob. 23RQCh. 4 - Prob. 24RQCh. 4 - Prob. 25RQCh. 4 - Describe how management maintains control over...Ch. 4 - Prob. 27RQCh. 4 - Describe the operating, investing, and financing...Ch. 4 - Why is an analysis of the companys cash balance...Ch. 4 - We compared Regal Entertainment and Cinemark at...Ch. 4 - Prob. 4.1BECh. 4 - Match each of the following components of internal...Ch. 4 - Prob. 4.3BECh. 4 - Prob. 4.4BECh. 4 - During the year, the following sales transactions...Ch. 4 - Prob. 4.6BECh. 4 - Prob. 4.7BECh. 4 - Prob. 4.8BECh. 4 - Prob. 4.9BECh. 4 - Prob. 4.10BECh. 4 - Prob. 4.11BECh. 4 - Prob. 4.12BECh. 4 - Prob. 4.13BECh. 4 - Prob. 4.14BECh. 4 - Prob. 4.15BECh. 4 - On January 12, Ferrell Incorporated obtains a...Ch. 4 - Prob. 4.17BECh. 4 - For each company, calculate the ratio of cash to...Ch. 4 - Prob. 4.1ECh. 4 - Prob. 4.2ECh. 4 - Prob. 4.3ECh. 4 - Prob. 4.4ECh. 4 - Below are several amounts reported at the end of...Ch. 4 - Prob. 4.6ECh. 4 - Prob. 4.7ECh. 4 - Prob. 4.8ECh. 4 - Prob. 4.9ECh. 4 - Prob. 4.10ECh. 4 - Prob. 4.11ECh. 4 - Prob. 4.12ECh. 4 - Prob. 4.13ECh. 4 - Prob. 4.14ECh. 4 - Prob. 4.15ECh. 4 - Below are cash transactions for Goldman...Ch. 4 - Prob. 4.17ECh. 4 - Prob. 4.18ECh. 4 - Consider the following information: 1.Service...Ch. 4 - Prob. 4.20ECh. 4 - Prob. 4.1APCh. 4 - Prob. 4.2APCh. 4 - Prob. 4.3APCh. 4 - Prob. 4.4APCh. 4 - Prob. 4.5APCh. 4 - Prob. 4.1BPCh. 4 - Prob. 4.2BPCh. 4 - Prob. 4.3BPCh. 4 - Prob. 4.4BPCh. 4 - Prob. 4.5BPCh. 4 - An examination of the cash activities during the...Ch. 4 - Prob. 4.2APFACh. 4 - Prob. 4.3APFACh. 4 - Prob. 4.4APCACh. 4 - Prob. 4.5APECh. 4 - Prob. 4.7APWC
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- Kabab Co. is considering a $240,000 investment, which will provide net returns of $110,000, $160,000, and $220,000 in the second, third, and fourth years, respectively. What is the payback period? Round up to the next month Use the following table: Year Cash Outflow Cash Inflow Net Cash Flow Cumulative Cash Flowarrow_forwardFor the year ended December 31, 2022, Settles Incorporated earned an ROI of 10.5%. Sales for the year were $9 million, and average asset turnover was 2.1. Average stockholders' equity was $2.8 million. Required: Calculate Settles Incorporated's margin and net income. Note: Round "Margin" answer to 1 decimal place. Enter the net income answer in dollars, i.e., $5 million should be entered as 5,000,000. Calculate Settles Incorporated's return on equity. Note: Round your answer to 1 decimal place.arrow_forwardsolution star industries has published its annual account. it indicates that during the year the year the firm had sales of $3,500,000, cost of goodssold totaled $2,300,000, operating expenses of $420,000, and depreciation expenses 0f $240,000. the firm is in 30% tax bracket. determine the firm's operating cash flow?arrow_forward
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