only 3.5 sorry for the quality BA332 ORPORATE FINANCE HAPTER Problem 3.4 Legacy
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only 3.5 sorry for the quality
BA332 ORPORATE FINANCE HAPTER Problem 3.4 Legacy Inc has provided the following information Total Assets-St.000.000 Total asset turnover 15 Operating profit Margin-8% Net profit margin-5% Debt ratio 50% b. Calculate Legacy's return on equity Problem 3.5 Mesa Corporation earned an operating profit margin of 15 percent based on sales of S10 million and total assets of S5 million last year What was Mesa's total asset turnover ratio? During the coming year, the company president has set a goal of attaining a total asset turnover of 3. How much must firm sales rise, other things being the same for the goal to be achieved? a. b. cWhat was Mesa's operating income return on investment last year? Assuming the firm's operating profit margin remains the same, what will the operating income return on investment be next year if the total asset turnover goal is achieved? Problem 3.6 Phoenix Aviation Company had a gross profit margin of 40 percent and sales of S20 million last year. 72 percent of the firm's sales are on credit and the remainder are cash sales. Phoenix's current assets equal S2 million, its current liabilities equal $500,000 and it has $200,000 in cash plus marketable securities. Assume a 360-day year. a. If Phoenix's accounts receivable is $1,200,000, what is its average collection periou? b. If Phoenix decreases its average collection period to 20 days, what will be its n level of accounts receivable? : Phoenix's inventory turnover ratio is eight times. What is the level of Phoeniy's inventories?Explanation / Answer
3.5
total asset turnover ratio
=sales/total assets
=10/5
=2.00
b.
Asset turnover=3
sales/assets=3
sales/5=3
sales=5*3=15
so sales should rise by=15-10=5 million
c.
operating income return last year=(10*15%)/5=30%
operating income return next year=(15*15%)/5=45%
the above is answer..
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