Use the following information to determine the return on assets (ROA).  Gross profit margin 50.0% Operating profit margin 24.0% Net profit margin 7.0% Fixed asset turnover           2.10 Total asset turnover           1.50 Liabilities-to-assets 30% Equity multiplier           1.43 Enter your answer rounded to 3 places.  In other words, if your answer is 7.2134%, enter 0.072.  If your answer is 7.8561%, enter 0.079.

Given the following information, what is the company’s Cash Conversion Cycle (CCC)? [Use a 365 day year] Sales on credit  $        260,000 Cost of good sold             210,000 Purchases               63,000 Accounts receivable               17,096 Inventory               28,767 Accounts payable                 1,726

Use the following Weighted Average Cost of Capital (WACC) and the cash flows for years 0-4 to calculate the Net Present Value (NPV) for Project Freefall.  WACC 5% CF 0         (131,000) CF 1             45,000 CF 2             47,000 CF 3             49,000 CF 4             38,000                                  

In the MasterDecker case, which projects had Payback Periods of less than one year when using correctly estimated cash flows?

Smitty’s Barbeque is considering opening a new location in the large city where it currently has three other locations.  The combined sales at the other three locations are $2,856,000 annually.  The new location is expected to generate sales of $550,000 in the first year with 1% sales growth per year for the next 6 years.  If the operating profit margin is 28% and the tax rate is 12%, what is the net after-tax cash flow for the new location for the first year of operations?

Jerry’s Burgers is considering opening a new location in the large city where it currently has four other locations.  The combined sales at the other four locations are $3,245,000 annually.  The new location is expected to generate sales of $760,000 in the first year with 3% sales growth per year for the next 5 years.  If the operating profit margin is 32% and the tax rate is 15%, what is the net after-tax cash flow for the new unit for the first year of operations?

Use the following information to determine the net profit margin.  Total assets  $   200,000.00 Total liabilities          85,000.00 Total equity        115,000.00 Sales        580,000.00 Cost of goods sold        360,000.00 Net income          31,320.00 Enter your answer rounded to 3 decimal places.  In other words, if your answer is 6.0589%, enter 0.0606.  If your answer is 8.1418%, enter 0.0814.

If two firms have identical net profit margins and identical total asset turnover ratios, the firm with the lower equity multiplier will have a higher return on equity.

Use the following information to determine the net profit margin.  Total assets  $   250,000.00 Total liabilities        110,000.00 Total equity        140,000.00 Sales        640,000.00 Cost of goods sold        450,000.00 Net income          43,520.00 Enter your answer rounded to 3 decimal places.  In other words, if your answer is 6.0589%, enter 0.0606.  If your answer is 8.1418%, enter 0.0814.

According to the trade-off theory of capital structure, the optimal capital structure is found by balancing the additional gains from leverage against the added costs from financial distress.