Use Appropriate Information from the List Below to Calculate the Amounts

question 68

Essay

Use appropriate information from the list below to calculate the amounts indicated.
Operating income $ 50,000
Adjusted after-tax operating income 35,000
Adjusted total assets 80,000
Average operating assets 90,000
Current liabilities 15,000
Revenue 120,000
Weighted average cost of capital 10%
a)Calculate return on investment
b)Calculate residual income
c)Calculate economic value added

Calculate the margin of safety in both dollars and as a percentage of sales.

Understand and apply the concept of contribution margin (CM) ratio in decision making.

Calculate sales units required to maintain net operating income when certain cost parameters change.

Understand the concept of operating leverage and its impact on profits with a change in sales volume.

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Definitions:

Adler

Alfred Adler was an Austrian medical doctor and psychotherapist who founded the school of individual psychology, focusing on the importance of feelings of inferiority.

Personality

A mix of attributes and traits that establish a person's unique personality and ways of acting.

Birth Order

The chronological order of siblings in a family, which is believed to influence their personality and psychological development.

Personality Measures

Tools or assessments designed to evaluate and quantify individual differences in various aspects of personality.