Question 1

 

Low Carb Diet Supplement Inc. has two divisions. Division A has a profit of $156,000 on sales of $2,010,000. Division B is only able to make $28,800 on sales of $329,000.  Based on the profit margins (returns on sales), which division is superior.

 

Question 3

 

Polly Esther Dress Shops Inc. can open a new store that will do an annual sales volume of $837,900. It will turn over its assets 1.9 times per year. The profit margin on sales will be 8 percent. What would net income and return on assets (investment) be for the year?

 

Question 15

Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation.

a.       Butters Corporation has a profit margin of 7 percent and its return on assets (investment) is 25.2 percent. What is its assets turnover?

 

 

a.       If the Butters Corporation has a debt-to-total-assets ratio of 50%, what would the firm’s return on equity be?

 

 

a.       If the Butters Corporation has a debt-to-total-assets ratio of 50%, what would the firm’s return on equity be?

a.       What would happen to return on equity if the debt-to-total-assets ratio decreased to 35%?

 

Question 19

 

Martin Electronics has an accounts receivable turnover equal to 15 times.  If accounts receivable are equal to $80,000, what is the value for average daily credit sales?

Question 21

Jim Short’s Company makes clothing for schools. Sales in 2013 were $4,820,000. Assets were as follows:

Cash: ———————————- $163,000

Accounts Receivable: —————-$889,000

Inventory: —————————-$411,000

Net Plant and Equipment———-$520,000

________

 

Total Assets————-$1,983,000

 

 

a.       Compute the following:

 

a.       In 2014, sales increased to $5,740,000 and the assets for that year were as follows:

 

____________________________________

Cash ———————————–$163,000

Accounts Receivable—————–$924,000

Inventory——————————-$1,063,000

Net Plant and Equipment ———– $520,000

_____________

Total Assets ————————— $2,670,000

 

Compute the four ratios