Consider the following condensed financial statements of Money Freedom, Inc. The company€™s target rate of return is 10% and its WACC is 7%:

Requirements
1. Calculate the company€™s profit margin. Interpret your results.
2. Calculate the company€™s asset turnover. Interpret your results.
3. Use the expanded ROI formula to confirm your results from Requirement 1.
Interpret your results.
4. Calculate the company€™s RI. Interpret your results.
5. Calculate the company€™s EVA. Interpret yourresults.

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MONEY FREEDOM, INC. Comparative Balance Sheet As of December 31, 2012 and 2011 2012 2011 Assets $ 7,000 62, 500 $ 66,000 Cash Account receivable 28,400 Supplies 500 600 Property, plant, and equipment, net 300,000 200,000 Patents, net 160,000 105,000 $ 600,000 $ 400,000 Total assets Liabilities and Stockholders' Equity $ 32,000 $ 34,000 Accounts payable Short-term notes payable 146,000 48,000 Long-term notes payable 200,000 130,000 Common stock, no par 200,000 167,500 Retained earnings 22,000 20,500 $ 600,000 $ 400,000 Total liabilities and stockholders' equity MONEY FREEDOM, INC. Income Statement For the Year Ended December 31, 2012 $5,000,000 Sales revenue 2,900,000 $2,100,000 COGS Gross profit Operating expenses 1,900,000 $ 200,000 Operating income Other: Interest expense (20,000) $ 180,000 Income before income tax expense (63,000) Income tax expense $ 117,000 Net income