For fiscal year 2020, LaundryMate Products had income as follows: Sales$ 55,000,000 Less: Cost of goods sold$ 38,400,000 Selling and administrative expense5,700,000 Interest expense1,000,00045,100,000 Income before taxes9,900,000 Less income taxes1,980,000 Net income$7,920,000 Other pertinent information for 2020 follows: Total assets$ 97,000,000 Noninterest-bearing current liabilities3,200,000 Required rate of return on invested capital10% Required Calculate NOPAT, invested capital, and ROI for LaundryMate Products. Income tax rate =÷= NOPAT =× ()] = Invested capital =―= ROI = = Comment on the company's profitability. What-if? Consider the following after you have completed the requirements of E12-8. NOPAT =× ()] =+ [Suppose LaundryMate Products had $11,000,000 of fully depreciated equipment of which it decided to dispose. Calculate ROI after the disposal of the equipment. + [
Adjusted invested capital =― = New ROI = = What incentives might a manager have to dispose of assets?
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