Discuss how a financial manager can use 'inventory turnover ratio' in ratio analysis to manage the...
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Discuss how a financial manager can use 'inventory turnover ratio' in ratio analysis to manage the firm better. (2 marks) Question 4 Your firm is considering investing in an equipment. It is given that the investment requires an amount is $300,000 and the firm's weighted average cost of capital is 15%. The investment is expected to generate a net operating profit after tax of $40,000. With a tax rate of 20%, calculate the economic value added (EVA) of the investment. Should the firm accept or reject the project? Explain your reason(s). (4 marks) Discuss how a financial manager can use 'inventory turnover ratio' in ratio analysis to manage the firm better. (2 marks) Question 4 Your firm is considering investing in an equipment. It is given that the investment requires an amount is $300,000 and the firm's weighted average cost of capital is 15%. The investment is expected to generate a net operating profit after tax of $40,000. With a tax rate of 20%, calculate the economic value added (EVA) of the investment. Should the firm accept or reject the project? Explain your reason(s). (4 marks)
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Answer to Question 3 The inventory turnover ratio is a financial ratio that measures how efficiently a company manages its inventory by calculating the number of times the company sells and replaces i... View the full answer
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