FREE Trial

The Anderson Corporation (an all-equity-financed firm) has a sales level of $280,000 with a 10 percent profit margin before interest and taxes. To generate this sales volume, the firm maintains a fixed-asset investment of $100,000. Currently, the firm maintains $50,000

The Anderson Corporation (an all-equity-financed firm) has a sales level of $280,000 with a 10 percent profit margin before interest and taxes. To generate this sales volume, the firm maintains a fixed-asset investment of $100,000. Currently, the firm maintains $50,000 in current assets.
a. Determine the total asset turnover for the firm and compute the rate of return on total assets before taxes.
b. Compute the before-tax rate of return on assets at different levels of current assets starting with $10,000 and increasing in $15,000 increments to $100,000.
c. What implicit assumption is being made about sales in Part (b)? Appraise the significance of this assumption along with the policy to choose the level of current assets that will maximize the return on total assets as computed in Part (b).
Asset Turnover
Asset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio. Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...

This problem has been solved!


Do you need an answer to a question different from the above? Ask your question!
  • Tutor Answer

a Total asset turnover 280 000 150 000 1 867 Return on assets before taxes 28 000 150 000 18 67 b P…View the full answer


answer-question
Related Book For  answer-question
Fundamentals Of Financial Management

Fundamentals Of Financial Management

ISBN: 9780273713630

13th Revised Edition

Authors: James Van Horne, John Wachowicz

See More Books
Posted Date: December 07, 2015 05:42:00
See More Questions

Students also viewed these Finance questions

Q:
The Consolidated Transfer Co. is an all-equity financed firm. The beta is .75, the market risk premium is 8% and the risk-free rate is 4%. What is the expected return of Consolidated? A. 7% B. 8% C....
A:
D 10 Computation Expected Return of C......
Q:
Equity, Inc. is currently an all-equity financed firm. It has 10,000 shares outstanding that sell for $20 each. The firm has an operating income of $30,000 and pays no taxes. The firm contemplates a...
A:
Before restructuring Value of the firm 10 000 x 20......
Q:
The CEO of JJJ, Inc., owns 27 percent of his currently all-equity financed firm worth $100 million. He has proposed splitting off one of the divisions (worth $25 million) of his company to let it...
A:
Since his ownership will re......
Q:
The study of the new CPMP Mathematics methodology described in Exercise 57 also tested students' abilities to solve word problems. This table shows how the CPMP and traditional groups performed. (The...
A:
H 0 The mean score of CPMP students is the same as the mean score of traditional students C T or C T......
Q:
Purpose: To help you understand and compare the performance of two companies in the same industry. Go to the Bombardier Annual Report located in MyAccountingLab. Now access the Annual Report for The...
A:
The three accounts that suggest that Bombardier uses the accrual basis of accounting are as follows......
Q:
A runner is at the position x = 0 m when time t = 0 s. One hundred meters away is the finish line. Every ten seconds, this runner runs half the remaining distance to the finish line. During each...
A:
The runner is at the position x 0 m when time t 0 s the finish line is 100 m away During each ten......
Q:
For each of the following lists of premises, derive the conclusion and supply the justification for it. There is only one possible answer for each problem.
A:
Click to View...
Q:
On March 1, 2014, Smart Way Freight Company sold $200,000 of its 9.5 percent, 20-year bonds at 106. The semiannual interest payment dates are March 1 and September 1. The market interest rate is 8.9...
A:
2014 Mar 1 Cash 212 000 Unamortized Bond Premium 12 000 Bonds Payable 200 000 So......
Q:
Most tax practitioners will tell their clients not to contribute appreciated property into their C corporation because even though it can go into the corporation tax-free under Section 351, it will...
A:
When tax practitioners advise against contributing appreciated property into a C corporation the con......
Q:
Although organizations in the manufacturing sector usually carry more inventory than service firms, effective inventory management is nonetheless important to both manufacturers and service...
A:
Inventory management is a critical aspect of operations management for both manufacturing and service organizations Inventory refers to the stock of materials work in progress and finished products th......
Q:
At times, long-term interest rates are lower than short-term rates, yet the discussion in the chapter suggests that long-term financing is more expensive. If long-term rates are lower, should the...
A:
While short term rates exceeding long term rates makes the long term financing method m......
Q:
Mendez Metal Specialties, Inc., has a seasonal pattern to its business. It borrows under a line of credit from Central Bank at 1 percent over prime. Its total asset requirements now (at year end) and...
A:
a 11 1 4 3 per quarter Alternative 1 is lowest in cost because the company borrows at a lower rate 1......
Q:
Knowing that the coefficient of static friction between collar C and the vertical rod is 0.30, determine the magnitude of the largest and smallest couple M for which equilibrium is maintained in the...
A:
Largest value of Mis obtained from the solution of Problem 10 48 Pl 2 tan 0 Mmax Thus......
Q:
A circular fin (k = 240 W/m K) of uniform cross section, with diameter of 10 mm and length of 50 mm, is attached to a wall with surface temperature of 350C. The fin tip has a temperature of 200C,...
A:
To solve this problem using the finite difference method we will first divide the circular fin into several nodes along its length The nodal spacing i......
Q:
Refer to the x- and R-charts, Exercises 16.8 and 16.17. Conduct a runs analysis to detect any trend in the process. Data from Exercise 16.8 The central processing unit (CPU) of a microcomputer is a...
A:
A runs analysis is a valuable tool in statistical process control that helps us identify patterns or trends in data It involves counting consecutive d......
Q:
Repeat Problem 1 for the following gears: N = 180; P d = 80 Problem 1 A gear has 44 teeth of the 20, full-depth, involute form and a diametral pitch of 12. Compute the following: (a) Pitch diameter...
A:
Certainly let s calculate the values for the given gear with 44 teeth and a diametral pitch of 12 Gi......
Q:
For a one dimensional steady state variable thermal conductivity heat conduction with uniform internal heat generation, develop a generalized finite difference formulation for the interior nodes,...
A:
To develop a generalized finite difference formulation for the one dimensional steady state heat conduction problem with variable thermal conductivity......
Q:
After constructing a control chart for the proportions of defective one-euro coins, it is concluded that the process is within statistical control. Does it follow that almost all of the coins meet...
A:
No the conclusion that a process is within statistical control does not necessarily imply that almos......
Q:
Evaluate the line integral. C xy dx + e y dy + xz dz, C is given by r(t) = t 4 i + t 2 j + t 3 k, 0 < t < 1
A:
Sc xy dx e dy x......
Q:
Read Case Study Google: Dont Be Evil Unless and answer the following: Why do you think Google was adamant about not wanting to supply information requested by the government concerning the Child...
A:
Google Inc on Child Protection Act When Google Inc initiated......
Q:
Pearson Brothers recently reported an EBITDA of $7.5 million and net income of $1.8 million. It had $2.0 million of interest expense, and its corporate tax rate was 40%. What was its charge for...
A:
EBITDA Depreciation 5 000 000 EBIT 2 000 000 Intere......
Q:
In its most recent financial statements, Newhouse Inc. reported $50 million of net income and $810 million of retained earnings. The previous retained earnings were $780 million. How much in...
A:
NI 50 000 000 R E Y E 810 000 000......
Q:
Which of the following actions are most likely to directly increase cash as shown on a firms balance sheet? Explain and state the assumptions that underlie your answer. a. It issues $2 million of new...
A:
Statements b and d will decrease the amount of cash on a companys ba......
Q:
Consider the display panel situation in Exercise 11.3, and let A, B, and C (represent the mean times to stabilize the emergency condition when using display panels A, B, and C, respectively. Figure...
A:
a F 30 11 p value 000 Reject H 0 Display panels are......
Q:
The following data represent enrollment in a major at your university for the past six semesters (Note: semester 1 is the oldest data; semester 6 is the most recent data): Semester Enrollment 1.. 87...
A:
a b Yes it does appear that trend is present c Equation 16 16 is used for this part of the exercise......
Q:
On its website, the Statesman Journal newspaper (Salem1 Oregon1 1999) reports mortgage loan interest rates for 30-year and 15-year fixed-rate mortgage loans for a number of Willamette Valley lending...
A:
a versus b t 9 22 and Reject a......
Q:
The 2017 financial statements for the Thor and Gunnar companies are summarized below. These two companies are in the same business and in the same province but in different cities. One-half of Thor?s...
A:
Req 1 Ratio Thor Company Gunnar Company Tests of profitability 1 Net profit margin 112 000 1 120 000 100 10 00 42 000 336 000 100 12 50 2 Gross profit percentage 1 120 000 672 000 1 120 000 100 40 00......
Q:
In April, J. Rodriguez established an apartment rental service. The account headings are presented below. Transactions completed during the month of April follow. a. Rodriguez deposited $70,000 in a...
A:
Assets Liabilities Owners Equity Cash Accounts Receivable Supplies Prepaid Insurance Truck Office Eq......
Q:
Your friend is going through a tough time with his current significant other and believes she is cheating on him. He is aware of your technical prowess and has asked you to help him purchase and...
A:
A stalking app cell phone spy software can be loaded onto someones......
Q:
Lincoln wrote the Gettysburg Address if and only if France bombed Pearl Harbor. Write the following compound statements in symbolic form, then use your knowledge of the historical events referred to...
A:
Click to View...
Q:
Baker Machine Company Is a Job shop that specializes in precision parts for firms in the aerospace industry. Figure shows the current block plan for the key manufacturing centers of the...
A:
Baker Machine Company Closeness Department Rating Current Plan Propo......
Q:
Using the concept of pointers in Object Oriented Programming, write a C++ program to swap two integers values.
A:
You can swap two integer values using pointers in C Here s a C program to do tha......
Q:
Create a Java application according to the following specs: 1). Create an abstract class named Course . Each course object will have attributes for course ID, course title, enrollment limit, and...
A:
Course java import java io Serializable public abstract class Course implements Serializable protected String course ID protected String course title protected int enrollment limit protected int price......
Q:
Figure 15.21 on the next page gives the Minitab output of using multiplicative Winters method in month 168 to forecast the monthly hotel room averages in months 169 through 180. Here we have used...
A:
y 169......
Q:
When do we use the multiplicative Winters method?
A:
We use the multiplicativ......
Q:
An electronic implant that stimulates the auditory nerve has been used to restore partial hearing to a number of deaf people. In a study of implant acceptability (Los Angeles Times, January 29,...
A:
1 p 1 proportion of adults who were born deaf who remove the implant p 2 p......
Q:
Choose a written communication that was created by yourself or someone else. It is important to remember to include a copy of the written communication. Include the following actions and include them...
A:
In the absence of a specific document let s create a hypothetical scenario for this assignment Hypothetical Scenario You have received a memo from you......
Q:
What a communcation action team should communication to Community leaders and Governmental Representatives in a craisis situation? The crisis situation is the the shootings that occurred in La Loche,...
A:
In the aftermath of the tragic shootings that occurred in La Loche Saskatchewan in 2016 as a communications expert for the RCMP it is crucial to conve......
Q:
Fill in the number of periods for the following table, using one of the three methods below: a. Use the waiting period formula, n= In (FV/PV) In (1+r) b. Use the TVM keys from a calculator. c. Use...
A:
According to Time Value of Money the fo......
Q:
A firm is considering a project that has a cost of $440,000. The cash flows over the four-year life of the project are projected to be $230,000, $240,000, $215,000, and $165,000, respectively. At...
A:
The firm would be indifferent to undertaking this project at the rate that makes the net......
Q:
Debbie is a 34-year-old married homemaker. Her husband, Mark, is a 37-year-old corporate lawyer who specializes in international law. Debbie and Mark met each other 11 years ago, shortly after he was...
A:
Based on the information provided in the case study Debbie exhibits symptoms consistent with Borderline Personality Disorder BPD as outlined in the DS......
Q:
Consider a steady-flow Carnot refrigeration cycle that uses refrigerant-134a as the working fluid. The maximum and minimum temperatures in the cycle are 30 and - 20oC, respectively. The quality of...
A:
A steady flow Carnot refrigeration cycle with refrigerant 134a as th......
Q:
Heineken N.V., a global brewer based in the Netherlands, reports the following balance sheet accounts for the year ended December 31, 2016 (euros in millions). Prepare the balance sheet for this...
A:
Heineken N V Balance Sheet in Euro millions December......
Q:
The following identity is known as Fermats combinatorial identity: Give a combinatorial argument (no computations are needed) to establish this identity. Consider the set of numbers 1 through n. How...
A:
The number of subsets of size k that have......
Q:
Establish the Lagrange Identity, that for any numbers a1, a2,..., an and b1,b2,..., bn, Use the identity to show that the correlation coefficient is equal to 1 if and only if all of the sample points...
A:
To establish the Lagrange Identity consider the case when n 2 a......
Q:
Establish the identity and then use it to derive Lagrange's trigonometric identity: 1-2n+1 1 + cos + cos 2 + . . . + cos,18 =-+ (0
A:
If S 1 z z 2 z n then S zS 1 z z 2 z n z z 2 z 3 z n 1 1 z n 1 Hence S 1 z n 1 1 z p......
Q:
Which one of the following results from the latest decision round are least important in providing guidance to company managers in making their strategic moves and decisions to improve their...
A:
The detailed answer for the above question is provided below e The Industry Score board and each com......
Q:
In December 2014, 6-month futures on the Australian S&P/ASX 200 Index traded at 5,376. Spot was 5,442. The interest rate was 2.5%, and the dividend yield was about 4.7%. Were the futures fairly...
A:
F t S 0 1 r f y t......
Q:
An apparatus for measuring thermal conductivity employs an electrical heater sandwiched between two identical samples of diameter 30 mm and length 60 mm, which are pressed between plates maintained...
A:
KNOWN Electrical heater sandwiched between two identical cylindrical 30 mm dia x 60 mm length samples whose opposite ends contact plates maintained at......
Q:
Use indirect truth tables to determine whether the following arguments are valid or invalid.
A:
Click to View...
Q:
Jo Birde established an insurance agency on March 1, 2013, and completed the following transactions during March: a. Opened a business bank account in the name of Birde Insurance Inc., with a deposit...
A:
1 Statement of Balance Sheet Income Cash Flows Assets Liabilities Stockholders Equity Statement Notes Capital Retained Cash Land Payable Stock Earning......
Q:
Mauritius runs a self-assessment tax system. Therefore, voluntary compliance is akey element in the efficient and effective tax administration and revenue collection." a) In the light of the above...
A:
a Voluntary compliance in taxation refers to the principle that taxpayers are expected and required to accurately report their income calculate their......
Q:
Show how to transform the weight function of a weighted matroid problem, where the desired optimal solution is a minimum-weight maximal independent subset, to make it a standard weighted-matroid...
A:
Suppose that WW is the largest weight that any one element takes Then......
Q:
In Problems, establish each identity. sin 0 + cos 0 cos 0 - sin 0 sec 0 csc 0 sin 0 cos e
A:
sin cos cos sin cose co......
Q:
In Problems, establish each identity. sin' e + cos' 0 1- sin 0 cos 0 sin 0 + cos 0
A:
3 3 sin 0 cos0 si......
Q:
What factors or circumstances may have caused KPMG to reduce the number of budgeted hours for the 1995 TDW audit and to assign less experienced personnel to that engagement? For each factor or...
A:
Listed next are examples of factors or circumstances that may have influenced KPMGs decision to redu......
Q:
What do best practices suggest that advertisers first do before engaging in Social Media?
A:
Before engaging in social media advertising advertisers should consider the following best practices Define Clear Objectives Determine your goals for......
Q:
IMC can involve many different elements, and a Web site can be an integral part of a companys marketing efforts. Discuss how the following three companies might make a Web site part of an overall IMC...
A:
Here are some ways that the three companies you mentioned could use their websites as part of an overall IMC effort Green Threads This clothing retail......
Q:
Del Rivero Messianu DDB can be classified as a general consumer agency with an entrepreneurial slant because of its smaller size and the market segments it caters to. How do you think it would...
A:
Del Rivero Messianu DDB is a Miami based advertising agency that specializes in reaching diverse and......
Q:
Targets value-based advertising tends to take a humorous and unexpected approach to communicating its message to the reader. But Target also uses hard-sell ads in newspaper inserts. Why?
A:
Target like many large retailers employs a multi faceted advertising strategy that includes both value based humorous and unexpected approaches as wel......
Q:
Considering recent advances in computer animation technology, many clients and viewers expect to be wowed with the latest technology in commercials, especially those representing technical...
A:
The decision to use a minimum of special effects in a TV ad for the Prius launch by Saatchi Saatchi and Toyota depends on several factors including th......
Q:
In what ways are MNEs developing new business networks? Give two examples and then explain why these developments are likely to help the companies maintain their competitive strengths.
A:
Successful MNEs are changing their relationships with their sup......
Q:
A spacecraft has left the earth and is moving toward Mars. An observer on the earth finds that, relative to measurements made when the spacecraft was at rest, its a. length is shorter b. KE is less...
A:
Explanation Identify assets and their values Understanding the value of an asset is th......
An Occupational Information System For The 21st Century The Development Of O Net 1st Edition - ISBN: 1557985561 - Free Book