Reference no: EM133944721

Questions

1. The management of International Heal Medical Company is evaluating the performance of its three divisions. The Booboo Division had operating profit of ?24,950 and on average used assets with a book value of ?311,900. The Splint Division had an operating profit of ?17,500 and used average assets of ?177,950. The Intensive Care Division had an operating profit of ?28,500 and average assets of ?475,000. The company is planning to award the Intensive Care Division relying on its high operating profit. Should the management continue with this decision? Justify your answer.

2. Charlie's Construction Company is a growing construction business that has a few contracts to build storefronts in Pasay. Charlie's balance sheet shows beginning assets of ?1,000,000 and an ending balance of ?2,000,000 of assets. During the current year, Charlie's company had a net income of ?20,000,000. Compute for the company's return on assets and interpret the results. 3. Dave's Guitar Shop is thinking about building an addition onto the back of its existing building for more storage. Dave consults with his banker about applying for a new loan. The bank asks for Dave's balance to examine his overall debt levels. The banker discovers that Dave has total assets of ?5,000,000 and total liabilities of ?25,000. Compute for Dave's debt ratio.