Question: Can correct those problems? Problem 2-1 (Algo) Given the following information: Use Figure 2.3. Categories Sales Cost of goods sold Variable expenses Fixed expenses Inventory

Can correct those problems?

Can correct those problems? Problem 2-1 (Algo)

Problem 2-1 (Algo) Given the following information: Use Figure 2.3. Categories Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets $ $ $ $ $ $ $ $ Values 47,200,000 29,500,000 5,900,000 6,950,000 8,950,000 4,950,000 3,950,000 6,950,000 a. What is the net profit margin for this firm? (Round your answer to 2 decimal places.) Net profit margin 10.00 X % b. What is the asset turnover? (Round your answer to 2 decimal places.) Asset turnover 1.90 c. What is the return on assets? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Return on assets 20.00 X % You are the operations manager for a small kayak and canoe manufacturer (Valley Kayaks) located on the Pacific Northwest (Oregon). Lately your company has experienced product quality problems. Simply put, the kayaks that you produce occasionally have defects and require rework. Consequently, you have decided to assess the impact of introducing a total quality management (TQM) program. After discussing the potential effects with representatives from marketing, finance, accounting, and quality, you arrive at a set of estimates (contained in the following table). Top management has told you that they will accept any proposal that you come up with PROVIDED that it improves the return on assets measure by at least 20 percent. Use Figure 2.3. Estimated Impact of TOM 8% + (improvement) 6.00% - (reduction) Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Current Values $ 2,886,000 $ 2,220,000 $ 370,000 $ 144,300 $ 318,000 $ 102,000 $ 639,000 $ 408,000 20% % % a.Calculate ROA with changes and without changes? (Round your answers to 2 decimal places.) ROA With changes Without changes 100.23 X % 10.35 % As the operations manager for Valley Kayaks (as described in the previous problem), you find yourself faced with an interesting situation. Marketing has informed you that they have lost a number of sales because of a lack of inventory. Kayaks, being seasonal in nature, have to be in stock at your dealers if they are to be sold (customers are not willing to wait). The director of marketing proposes that you increase inventories by 25 percent (a major investment to you). She has also given the information in the following table. Use Figure 2.3. Proposed Impact of Inventory Increase 30 % + (improvement) Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Fixed assets Current Values $ 3,990,000 $ 2,850,000 $ 570,000 $ 199,500 $ 420,000 $ 195,000 $ 795,000 $ 420,000 20% - reduction 10% + (increase) 25% + % % a.Using the information given, complete the following table and calculate the ROA for current values and new values. (Round "ROA" to 2 decimal places.) Category Sales Cost of goods sold Variable expenses Fixed expenses Inventory Accounts receivable Other current assets Current Values $ 3,990,000 $ 2,850,000 $ 570,000 $ 199,500 $ $ 420,000 $ 195,000 $ 795,000 $ 420,000 70.85 X % New Values $ 5,187,000 $ 2,850,000 $ 456,000 $ 219,450 $ 525,000 $ 195,000 $ 795,000 $ 420,000 190.55 X % Fixed assets ROA

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