Answered: ABC company has EBIT of $1,200. The…

ABC company has EBIT of $1,200. The company has capital of $3,100. The WACC of the company is 10%. The tax rate is 40%. Calculate the Economic value added of the company.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter6: Accounting For Financial Management

Section: Chapter Questions

Problem 10P: The Moore Corporation has operating income (EBIT) of 750,000. The companys depreciation expense is...

See similar textbooks

Related questions

Q: ENN Corporation has interest expense of P16,000, sales of P600,000, a tax rate of 30%, and after-tax…

A: Times interest earned ratio = Earnings before interest and tax/interest expense where, Earnings…

Q: Trevi Corporation recently reported an EBITDA of $32,800 and $9,500 of net income. The company has…

A: given, EBITDA =$32,800 net income= $9,500 interest expense= $6,700 corporate tax rate = 35 %

Q: AEI Incorporated has $5billion in assets, and its tax rate is 40%. Its basic earning power (BEP)…

A: Assets = $ 5 billion Tax rate (T) = 40% BEP ratio = 11% ROA = 10%

Q: What is Chipotle’s TIE

A: TIE of a company means Times Interest Ratio or interest cover ratio of a company. It evaluates a…

Q: Suppose a firm has the following information: Sales = $10million; costs of goods sold (excluding…

A: Computation:

Q: Red Company has total interest charges of $10,000 per year, sales of $1 million, a tax rate of 40…

A: Interest expenses = $10,000 Sales = $1,000,000 Tax rate = 40% Net profit ratio = 6% Profit before…

Q: ABC company has EBIT of $1200. The comapny has capital of $3100. The Wacc of the company is 10%. The…

A: Economic Value Added(EVA) is the measurement of the financial performance of a company, based on the…

Q: Leo's Corp has sales of $ 684,000, operating expenses of $ 437,000, interest expense of $ 13,800,…

A: Ratio analysis: This is the quantitative analysis of financial statements of a business enterprise.…

Q: Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, and a cost of goods sold at $5000,…

A: Net profit after tax = (sale-cogs-operating expenses)×1-tax given, sales= $11,000 COGS= $5000…

Q: Suppose Ningbo Steel has sales revenue of $11,000 sales revenue, cost of goods sold off $5000,…

A: Given information : sales revenue = $11,000 cost of goods sold = $5000 operating expenses = $1000…

Q: Lawn Care, Inc., has sales of $367,400, costs of $183,600, depreciation of $48,600, interest of…

A: Return on equity measures the return generated by common or equity shareholders from their…

Q: McShane Corporation has sales of $300,000, a gross profit margin of 35%, operating expenses of…

A: The time interest earned ratio is the ratio that provides the ability of the company to pay of its…

Q: Papa Roach Exterminators, Inc., has sales of $659,000, costs of $275,000, depreciation expense of…

A: In this question we require to calculate the addition to retained earnings for Papa Roach…

Q: A firm had gross profits from sales in the amountof $180,000, operating expenses of $90,000,and…

A: Net Income is defined as the aggregate amount of money that the business earned in the time period,…

Q: How much free cash flow did the firm generate during the current year? Round your answer to the…

A: Information Provided: Tax rate = 35% Previous operating capital = $2100 Current operating capital =…

Q: Your firm has the following income statement items: sales of $50,250,000; income tax of $1,744,000;…

A: Income before tax means net income of the business after considering all operating and non operating…

Q: What is the net income for this firm

A: Information Provided: Sales = $679,000 Costs = $341,000 Depreciation = $85,000 Interest expense =…

Q: Bed Bug Inn has annual sales of $137,000. Earnings before interest and taxes are equal to 5.8…

A: We know that the formula to calculate the profit margin is Profit Margin = (Net Income/Sales) * 100…

Q: Byrgenwerth Corp has $55,000,000 of assets, and its tax rate is 28%. Its Basic Earning Power (BEP)…

A: A ratio that provides information about the company regarding the capability of payoff its debt…

Q: Avocado Company has an operating income of $100,800 on revenues of $1,013,000. Average invested…

A: Return on Investment is a ratio that shows the relationship between net profit and the cost of…

Q: AEI Incorporated has $5 billion in assets, and its tax rate is 40%. Its basic earning power (BEP)…

A: The Times Interest earned ratio provides information as company is able to meet the interest cost…

Q: Mason Storm Inc. has a profit margin of 16% based on revenues of $400,000 and an investment turnover…

A: Residual income is the income which is in excess of the net operating income less a charge of…

Q: Humphrey Hotels' operating income (EBIT) is $40 million. The company's times interest earned (TIE)…

A: Given: EBIT $40 million Times interest earned(TIE) 8 times Tax rate 40% Basic Earning…

Q: Foraker Inc. has sales of $46,200, costs of $23,100, depreciation expense of $2200, and interest…

A: Sales = $46,200 Costs = $23,100 Depreciation = $2,200 Interest expense = $1700 Tax rate = 22%

Q: The Huck Printing Co. had sales of $10 million, Operating Income of $3 million; After tax income of…

A: Return on Equity: Return on equity (ROE) is a financial indicator that measures a company's net…

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company's…

A: Given, Degree of operating leverage = 5 Increase in sales = 15%

Q: Two Sisters Dresses has net working capital of $43,800, net fixed assets of $232,400, net income of…

A: Net working capital - $43,800 Net Fixed assets - $232,400 Net income - $43,900 Current liabilities -…

Q: Green Fire, Inc., has sales of $60 million, total assets of $42 million, and total debt of $18…

A: The return on assets is reflective of profitability ratio which will help in finding out the rate of…

Q: Sheaves, Inc., has sales of $54,000, costs of $24,600, depreciation expense of $2,650, and interest…

A: Operating Cash Flow = EBIT + Depreciation - Taxes EBIT = Sales - Cost - Depreciation - Interest

Q: BN had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Degree of operating leverage = % change in operating income% change in sales…

Q: Russell Securities has $100 million in total assets and its corporate tax rate is 40 percent. The…

A: Total assets =$100 million BASIC EARNING POWER =15% Tax=40% RETURN ON ASSETS =9

Q: Round your answer to the nearest dollar. Use a minus sign to enter a negative value, if any.

A: Economic Value Added is also called economic profit. It measures company financial performance,…

Q: Rose inc. had sales of $7 million during the past year. The cost of goods sold amounted to $4…

A: Cost of goods sold exhibits direct cost incurred by company for producing goods and services.

Q: Last year, Hassan's Madhatter, Inc. had an ROA of 6 percent, a profit margin of 12.80 percent, and…

A: Assets: These are the resources owned and controlled by business and used to produce benefits for…

Q: MPI Incorporated has $5 billion in assets, and its tax rate is 35%. Its basic earning power (BEP)…

A: To determine times-interest-earned (TIE) ratio, following formula will be used:

Q: A firm has a profit margin of 15% on sales of $20,000,000. If the firm has debt of $7,500,000, total…

A: Return on assets (ROA) is the return that the company earns from the assets invested in the…

Q: RJS generated $78,000 net income this year. The firm's financial statements also show that its…

A: Net income = $ 78,000 Interest expenses = $ 40,000 Tax rate = 35% NOPAT = Net income+[Interest…

Q: Local Co. has sales of $10.2 million and cost of sales of $6.2 million. Its selling, general and…

A: Gross profit margin (GPM) refers to the portion of the company’s goods and services that is…

Q: Humphrey Hotels’ operating income (EBIT) is P40 million. The company’s times interest earned (TIE)…

A: In terms of accountancy, assets are the business items which provides benefit over a long period of…

Q: NUBD had 5 degrees of operating leverage when its profit before taxes was P200,000. If the company’s…

A: Solution: Profit before taxes will increase by = Increase in sales * degrees of operating leverage…

Q: Your firm has total sales of $10,508. Costs are $6,062, depreciation expense is $1,188, and the…

A: Net profit margin = Net profit / Sales where, Net profit = Total sales - costs - depreciation…

Q: Holly Farms has sales of S509,600, costs of $448,150, depreciation expense of $36,100, and interest…

A: Here, Sales is $509,600 Costs is $448,150 Depreciation Expense is $36,100 Interest Paid is $12,400…

Q: Kristyle Company's net income last year was P40,000 and its interest expense was P8,000. Total…

A: Return on assets (ROA) refers to the evaluation of the profitability of the assets of a company.

Question

ABC company has EBIT of $1,200. The company has capital of $3,100. The WACC of the
company is 10%. The tax rate is 40%. Calculate the Economic value added of the company.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

Barton Industries has operating income for the year of $3,100,000 and a 38% tax rate. Its total invested capital is $20,000,000 and its after-tax percentage cost of capital is 5%. What is the firm's EVA? Round your answer to the nearest dollar, if necessary.
ABC company has EBIT of $1200. The comapny has capital of $3100. The Wacc of the company is 10%. The tax rate is 40%. calculate the EVA of the company
Suppose that X company has a total sales of $340,000. And a net income after tax of $47,600. Calculate the operating margin if you knew that the income tax rate is 30% and the interest rate is 15% A) 25.00% B) 35.30% C) 31.30% D) 23.50%
Idak Corp. has a pretax income of 21,000 and a 5% weighted-average cost of capital. Assets total 100,000 and current liabilities total 70,000. suppose the company's tax rate is 30%, its economic value added is:
Rivera Corporation has an operating income of $3 million and a tax rate of 32%. Capital invested is $12 million and the after-tax percentage cost of capital is 9%. Determine the economic value added (EVA) of the company.
Suppose Ningbo Steel had sales revenue of $11,000 sales revenue, and a cost of goods sold at $5000, operating expenses of $1000, a tax rate of 20%, and 1000 shates of common stock outstanding. Based on this information, what was the net profit after tax?
Humphrey Hotels’ operating income (EBIT) is $40 million. The company’s times interest earned (TIE)ratio is 8.0, its tax rate is 40 percent, and its basic earning power (BEP) ratio is 10 percent. What is thecompany’s return on assets (ROA)?
AEI Incorporated has $5billion in assets, and its tax rate is 40%. Its basic earning power (BEP) ratio is 11%, and its return on assets (ROA) is 10%. What is its net income?
Casey Motors recently reported the following information: Net income = $828,000. Tax rate = 25%. Interest expense = $250,000. Total invested capital employed = $8.8 million. After-tax cost of capital = 10%. What is the company's EVA? Answer options are provided in whole dollar.
Your firm has total sales of $10,508. Costs are $6,062, depreciation expense is $1,188, and the interest expense is $650. The tax rate is 30 percent. Compute the firm's net profit margin. Assume there are no other expenses. Round your answer to FOUR decimal places. For example, if your answer is .2525 or 25.25%, your answer should be 0.2525.
Humphrey Hotels' operating income (EBIT) is $40 million. The company's times interest earned (TIE) ratio is 8.0, its tax rate is 40 percent, and its basic earning power (BEP) ratio is 10 percent. What is the company's return on assets (ROA) (Ctrl) - carch
Humphrey Hotels’ operating income (EBIT) is P40 million. The company’s times interest earned (TIE) ratio is 8.0, its tax rate is 40 percent, and its basic earning power (BEP) ratio is 10 percent. What is the company’s return on assets (ROA)?