Revenues	500,000
Total Expenses	400,000
Net income	100,000

Holdings Limited are considering investing in $200,000 to open a new store and expand operations. Below are last years financial figures.

Assets
Current assets
Cash	10,000
Accounts Receivable	90,000
Inventory	50,000
Total current assets	150,000
Capital Assets (net)	350,000
TOTAL ASSETS	500,000
Liabilities and Equity
Current liabilities
Accounts Payable	45,000
Working Capital Loan	25,000
Total Current liabilities	70,000
Long term debts	30,000
TOTAL DEBTS	100,000
Shareholders Equity
Common Shares	450,000
Retained earnings	50,000
TOTAL SHAREHOLDERS EQUITY	400,000
TOTAL SHAREHOLDERS EQUITY + LIABILITIES	500,000

Next year the company expects sales to increase by 10% due to the expansion. The return on sales is expected to increase to 22%

Management also expects there to be changes in the working capital accounts on the balance sheet.

Accounts receivable will improve to 50,000

Inventory is expected to deteriorate to 70,000 by the year end

Questions

What was the company's return on total assets last year.

How much cash will internal operations provide (i.e. What is generated by net income, and changes in a/r, inventory etc.)

How much will the company have to raise from external sources to continue with the investment of 200,000 in capital assets

Answer rating: 100% (QA)

Last Years Return on Total Assets ROA 1 Calculate Net Profit Margin Net Profit Margin Net Income Rev... View the full answer