55) Managerial Financial Accounting Assignments P12-6 (a,b) Solution

55) Managerial Financial Accounting Assignments P12-6 (a,b) Solution

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P12-6 (a, b)
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Return on Investment, Profit Margin, and Investment Turnover [LO 4] Consider the following information for HandyCraft Stores for 2011 and 2012. 2011 2012 Total assets $45,000,000 $51,300,000 Noninterest-bearing current liabilities 4,000,000 4,500,000 Net income 3,500,000 4,500,000 Interest expense 2,200,000 2,700,000 Sales 60,000,000 87,500,000 Tax rate 40% 40% Compute ROI for both years. (Round answer for ROI to 4 decimal places, e.g. 0.1234.) ROI for 2011 [no answer] ROI for 2012 [no answer] P12-6 (a, b)
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2011 2012 Net income $3,500,000 $4,500,000 Plus interest 2,200,000 2,700,000 Less tax effect of interest 880,000 1,080,000 NOPAT $4,820,000 $6,120,000 Total assets $45,000,000
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Unformatted text preview: $51,300,000 Less noninterest-bearing current liabilities 4,000,000 4,500,000 Investment $41,000,000 $46,800,000 ROI (NOPAT Investment) 0.1176 Break ROI down into profit margin and investment turnover. (Round answers to 4 decimal places, e.g. 0.1234.) 2011 2012 Profit margin [no answer] [no answer] Investment turnover [no answer] [no answer] Click here if you would like to Show Work for this question 2011 2012 Profit margin (NOPAT sales) 0.0803 0.0699 Investment turnover (sales invested capital) 1.4634 1.8697 Profit margin turnover = ROI* 0.1176 0.1307 *ROI may be off slightly due to rounding...
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55) Managerial Financial Accounting Assignments P12-6 (a,b) Solution

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