Question: Stoney Mason, Inc., has sales of $6 million, a total asset turnover ratio of 6 for the year, and net profits of $120,000. a. What

Stoney Mason, Inc., has sales of $6 million, a total ratio of 6 for the year, and net profits of $120,000.
a. What is the company's return on assets or earning power?
b. The company is considering the installation of new point-of-sales cash registers throughout its stores. This equipment is expected to increase efficiency in inventory control, reduce clerical errors, and improve record keeping throughout the system. The new equipment will increase the investment in assets by 20 percent and is expected to increase the net profit margin from 2 to 3 percent. No change in sales is expected. What is the effect of the new equipment on the return on assets ratio or earning power?

Step by Step Solution

★★★★★

3.44 Rating (173 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

a Earning power Sales profitability Asset efficie... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Document Format (1 attachment)

635-B-F-F-M (6529).docx

120 KBs Word File

Students Have Also Explored These Related Finance Questions!

What is the total asset turnover ratio?

Carter, Inc., a manufacturer of electrical supplies, has an ROE of 23.1 percent, a profit margin of 4.9 percent, and a total asset turnover ratio of 2.6 times. Its peer group also has an ROE of 23.1...

Internet Marketing Inc. (IMI), which has been operating for three years, provides marketing consulting services worldwide for online companies. You are a financial analyst assigned to report on the...

Stoney Mason, Inc has sales of $ 6 million, a total asset turn over ratio of 6 for the year, and net profits of $ 1 2 0 , 0 0 0 . a ) What is the company's return on assets or earning power? b )...

Financial Accounting (ACTG4A) Spring 2019 Due: Tuesday May 7th, 2019 Apple Inc.-Analysis of Fiscal 2015 Annual Report (20 points) Inc. is an American multinational technology company that designs,...

Apple Inc. is an American multinational technology company that designs, develops, and sells consumer electronics, computer software, and online services. company's hardware products include the...

Using the Project Two Financial Formulas Spreadsheet spreadsheet and the balance sheet, income statement, and cash flow statement from Mergent Online for your chosen company, calculate the financial...

Apple Inc. is an American multinational technology company that designs, develops, and sells consumer electronics, computer software, and online services. The company's hardware products include the...

target walmart appendix D more information on target more information on walmart Refet to the financial statements of Target (Agpendix B) and Waimart (Apgendix C) and the Industry Ratio Report...

Require just a clear answer as outlined: Question 1 1. A firm has net working capital of $1,100 and current liabilities of $2,800. What is the current ratio? .98 2.56 .39 .72 1.39 Question 2 1. Top...

A sequence of yearly payments of P dollars is invested at the end of each of N years at interest rate i, compounded annually. The total amount in the account, or the amount of the annuity, is V. a)...

The Cycle Division of Sarrel Company has the following per unit data related to its most recent cycle called Roadbuster. Presently, the Cycle Division buys its body frames from an outside supplier....

Of the following demographic groups, which has the lowest poverty rate in the United States? a. Families headed by a female with no adult male present. b. Families in which the head of the household...

Develop a performance appraisal method for the workers and managers in each store. effective scale for appraising instructors? Why or why not?

Bradford Manufacturing Company has a beta of 1.45, while Farley Industries has a beta of 0.85. The required return on an index fund that holds the entire stock market is 12.0%. The risk-free rate of...

Calculate the required rate of return for Manning Enterprises assuming that investors expect a 3.5% rate of inflation in the future. The real risk-free rate is 2.5%, and the market risk premium is...

O WORDS POW QUESTION 7 2 points Nhy is the DuPont identity a valuable tool for analyzing the performance of a firm? Discuss the types of information it reveals as compared to ROE considered by...

Can I please have part B and C answered? (a) Compute the face value of a 30-year, fixed-rate mortgage with a monthly payment of $1,100, assuming a nominal interest rate of 9%. If the mortgage...

Simon Company's year-end balance sheets follow. At December 31 2017 2016 2015 Assets 42,461 $ 72,864 98,191 10,605 Cash 36,325 42,096 Accounts receivable, net Merchandise inventory Prepaid expenses...