Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. problem 9-13 two firms have sales of $1.5 million

Problem 9-13 Two firms have sales of $1.5 million each. Other financial information is as follows: Firm A B EBIT $330,000 $330,000 Interest Expense 30,000 60,000 Income...

Free

70.2K

Verified Solution

Question

Finance

Problem 9-13

Two firms have sales of $1.5 million each. Other financialinformation is as follows:

FirmAB
EBIT$330,000$330,000
Interest Expense30,00060,000
Income Tax50,00015,000
Debt1,020,000420,000
Equity1,250,0002,130,000

What are the operating profit margins and the net profit marginsfor these two firms? Round your answers to two decimal places.

Operating profit margins:

Firm A: %

Firm B: %

Net profit margins:

Firm A: %

Firm B: %

What are their returns on assets and on equity? Roundyour answers to two decimal places.

Return on assets:

Firm A: %

Firm B: %

Return on equity:

Firm A: %

Firm B: %

Answer & Explanation Solved by verified expert
3.6 Ratings (682 Votes)

Firm A Firm B
Sales       1,500,000.0       1,500,000.0
EBIT           330,000.0           330,000.0
Operating Profit Margin (EBIT/SALES) 22% 22%
Interest Expense             30,000.0             60,000.0
EBT (EBIT-Interest)           300,000.0           270,000.0
Income Tax             50,000.0             15,000.0
Net Income (EBT-Tax)           250,000.0           255,000.0
Net Profit Margin (Net Income/Sales) 16.7% 17.0%
Debt       1,020,000.0           420,000.0
Equity       1,250,000.0       2,130,000.0
Total Asset (Debt+Equity)       2,270,000.0       2,550,000.0
Return on Asset (Net income/Asset) 11.01% 10.00%
Return on Equity (Net Income/Equity) 20.0% 12.0%
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

1) Let P(x) = 3x(x − 1)3 (3x + 4)2 . List the zeros of P...

Biology
1.2K views

Define watershed and the watershed approach to water quality management. What are the implications of water...

Biology
1.2K views

Throughout the year the plant life cycle switches between a haploid n phase and a...

Basic Math
1.2K views

B is an enlargement of B Find the centre 5 scale factor 5 B B...

Algebra
1.2K views

Prove that if u and v are linear independent, then u + 3v and 3u...

Algebra
1.2K views

13 1 point Write an explicit rule to represent the sequence 4 10 16 22...

Accounting
1.2K views

The financial statements of Simon Co. include the following items (amounts in thousands): Income Statement...

Accounting
1.2K views

Len Wilson is general manager of Stonyside Salons. During 2024, Wilson worked for the company...

Accounting
1.2K views

Question text Computing Impairment of Intangible Assets Stiller Company had the following information for its...

Accounting
1.2K views

Construct the raw materials purchases budget???? ...

Accounting
1.2K views

Wright \& Boyle Company budgeted the following production in units for the second quarter of...

Accounting
1.2K views

QUESTION 11 In a Section 351 transaction, Pete transfers property worth $20,000 in which his...