Consider the following information for McKinley and Son, Inc. a. Evaluate the company in terms of...

Question:

Consider the following information for McKinley and Son, Inc.

a. Evaluate the company in terms of ROI.

b. While income has increased in fiscal year 2015, is it clear that the company's performance has improved?

12/31/2014 12/31/2015
Total assets 55,000,000 62,000,000
Non-interest-bearing current liabilities 1,100,000 1,320,000
Net income 3,300,000 3,426,000
Interest expense 726,000 770,000
Tax rate 35% 35%

Return on investment

Return on investment is the performance measure of any investment. Return on any venture depends on the risk that exists in the investment "Higher the Risk Higher will be its Return'. It is directly related to the risk.

Answer and Explanation:

Question (a)

_Calculation of ROI_

{eq}\begin{align*}\rm\text{Return on Investment}&=\dfrac{\rm\text{NOPAT}}{\rm\text{Net...

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Return on Investment: Definition, Formula & Example

from Intro to Business: Help and Review

Chapter 25 / Lesson 6
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