Question

Jane Doe is a private company which a management accountant is analyzing its performance. So it is trying to look at different components that are distributing to its success. The tests he wants to carry out are the following using the table below:

Current liabilities	4500
Notes payable	25600
Equity	150000
Personal car	15000
Tax rate	30%
Net income	19500
Sales	56200
Interest on debt	8%

REQUIRED

1. Calculate interest expense, tax and EBIT

2. Calculate the operating assets of the company.

3. In calculating the Plant ,Property and Equipment , he decides to use the gross PPE and ignores the accumulated depreciation. Can you mention one of the main reason why he decides to do so?

4. What are the profit margin and the asset turnover of the company?

5. Using Du Pont analysis, calculate the ROI of the company

6. What are the major criticisms directed towards the use of Return on Investment.

Answer 1