Author Question: In an effort to analyze Clockwork Company finances, Jim realized that he was missing the company's ... (Read 61 times)

arivle123

  • Hero Member
  • *****
  • Posts: 569
In an effort to analyze Clockwork Company finances, Jim realized that he was missing the company's net profits after taxes for the current year. Find the company's net profits after taxes using the following information.
 
  Return on total assets = 2
  Total asset turnover = 0.5
  Cost of goods sold = 105,000
  Gross profit margin = 0.30

Question 2

The firm's after-tax cost of debt is ________. (See Table 9.1 )
 
  A) 3.25 percent
  B) 4.67 percent
  C) 8 percent
  D) 8.13 percent



cegalasso

  • Sr. Member
  • ****
  • Posts: 295
Answer to Question 1

Sales = Cost of goods sold/(1 - Gross profit margin) = 105,000/(1 - 0.30 ) = 150,000
Total assets = Sales/(Total asset turnover)
= 150,000/0.50 = 300,000
Net profits after taxes = (ROA)  (Total assets)
= (0.02 )  (300,000 ) = 6,000

Answer to Question 2

B



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

All patients with hyperparathyroidism will develop osteoporosis. The parathyroid glands maintain blood calcium within the normal range. All patients with this disease will continue to lose calcium from their bones every day, and there is no way to prevent the development of osteoporosis as a result.

Did you know?

Approximately one in three babies in the United States is now delivered by cesarean section. The number of cesarean sections in the United States has risen 46% since 1996.

Did you know?

Though the United States has largely rejected the metric system, it is used for currency, as in 100 pennies = 1 dollar. Previously, the British currency system was used, with measurements such as 12 pence to the shilling, and 20 shillings to the pound.

Did you know?

Stroke kills people from all ethnic backgrounds, but the people at highest risk for fatal strokes are: black men, black women, Asian men, white men, and white women.

Did you know?

Barbituric acid, the base material of barbiturates, was first synthesized in 1863 by Adolph von Bayer. His company later went on to synthesize aspirin for the first time, and Bayer aspirin is still a popular brand today.

For a complete list of videos, visit our video library