Question: financial statement analysis the annual sales for salco inc were...
(Financial statement analysis) The annual sales for Salco, Inc. were $ 4.43 million last year. The firm's end-of-year balance sheet was as follows: LOADING.... Salco's income statement for the year was as follows: LOADING...
c. Given that the plant renovation in part (b ) occurs and Salco's interest expense rises by $ 53 comma 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?
Current assets $510,000
Net fixed assets 1,476,000
Owners' equity 993,000
Total Assets $1,986,000
Less: Cost of goods sold (3,498,000)
Gross profit $932,000
Less: Operating expenses (501,000)
Net operating income $431,000
Less: Interest expense (94,000)
Earnings before taxes $337,000
Less: Taxes(35 %) (117,950)
Net income $219,05