Domino Corp

question 3

Multiple Choice

Domino Corp.reported to its shareholders a before tax profit such that the ROA is 2.33% and the ROCE is 3.5% (both based on beginning balances) .The Return on sales is 8.75%.Gross margin is 40% and Sales General and Administrative expenses amount to 25% of sales.Long-term debts are bearing interest at the rate of 5% per year.The reimbursement of the principal will be in fine (i.e. ,a balloon payment at maturity) .Assume that sales revenue for the year was 100 CU.What was the capital structure in the beginning balance sheet?

• A) SHE= 107.12;LTD = 107.12;STD = 437.89
• B) SHE= 125;LTD = 125;STD = 130.43
• C) SHE= 87.50;LTD = 113.5;STD = 113.50
• D) SHE= 125;LTD = 125;STD = 125

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Definitions:

Entry Barriers

Obstacles that make it difficult for new competitors to enter an industry, including high startup costs, access to technology, and strict regulations.

Monopolistic Competition

A market structure in which many companies sell products that are similar but not identical, allowing them to have a degree of market power.

Nonprice Competition

A marketing strategy where businesses focus on product differentiation, quality, or service rather than altering prices to compete with other firms.

Allocative Efficiency

A state in which resources are allocated in a way that maximizes the overall utility or welfare of society, ensuring that every good or service is produced up to the point where the last unit provides a benefit to consumers equal to the cost of producing it.