Question

H I J K Enter numbers in yellow cells N O P Q R S A B C D E G The condensed balance sheet for Zear at the end of fiscal Year 8 follows the tax rate is 50%): Assets Liabilities and equity Current assets Current liabilities. ................ $2,000,000 Cash. $ 700,000 Long-term 77% debenture .............. 2,000,000 Receivables ....... 1,000,000 6% preferred stock, 10,000 shares, Other .................. 800,000 $100 par value ........... 1,000,000 Total current assets 2,500,000 Common stock. ....................... 1,800,000 Fixed assets (net)....... 5,500,000 Retained earnings 1,200,000 Total assets. $8,000,000 Total liabilities and equity.......... $8,000,000 (1)Calculating RNOA RNOA = NOPAT / average NOA for year 7 and year 8 mt no 00 where NOA = enter amount Operating assets enter amount Operating liabilities enter amount NOA 9 10 Operating expens * (1-tax rate) NOPAT (Opereating revenue: where NOPAT= enter amount enter amount enter amount enter amount 11 Required: Calculate RNOA for Zear at the end of fiscal year 8. 12 (assuming that no balance sheet item has changed from year 7 to year 8) 13 14 15 Other information available: | 16 Operatng Revenues: 5000000 17 Cost of goods sold: 3350000 18 Interest cost: 150000 19 Salaries expense: 700000 so RNOA = (do not round) 20 21

Answer 1

= NOPAT Average NOA Where Non for year * = operating Aneto - operating Liabilibies Non for year $ = 800000 - 200000 = $ 600000 NOPAT = operating Revenue - Operating Expenses *(!- Tax regte) = S000000 -(3350000 + 700000 )*(1-Tex orate) 950000 x [1 -0.50] 475000 RNOA = 79.1666% 475 000 100 G00000 * operating Ansets include all assets used in the conduct of ongoing operations of a business, * openating. liabilities include all shart - term liabilities sresulting from primary business operations of firem. Scanned with amScanner