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Question: financial statement analysis the annual sales for salco inc were...

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(Financial statement​ analysis) The annual sales for​ Salco, Inc. were $4.58 million last year.

Current assets





Net fixed assets


​Owners' equity


Total Assets




Salco's income statement for the year was as​ follows



​Less: Cost of goods sold


Gross profit


​Less: Operating expenses


Net operating income


​Less: Interest expense


Earnings before taxes


​Less: Taxes ​(35%​)


Net income


B) Salco plans to renovate one of its plants and the renovation will require an added investment in plant and equipment of $1.06 million. The firm will maintain its present debt ratio o50 percent when financing the new investment and expects sales to remain constant. The operating profit margin will rise to 13.8 percent. What will be the new operating return on assets ratio​ (i.e., net operating income divided by ÷total assets) for Salco after the​ plant's renovation?

C) Given that the plant renovation in part (b​) occurs and​ Salco's interest expense rises by $55,000

per​ year, what will be the return earned on the common​ stockholders' investment? Compare this rate of return with that earned before the renovation. Based on this​ comparison, did the renovation have a favorable effect on the profitability of the​ firm?

Please show your work. Thank you so much!

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