1. **Problem Statement:** Calculate financial metrics for Company AHL using the given data. 2. **Given Data:** - Total assets = 200000 - Total current liabilities = 90000 - Sales = 80000 - Net profit = 36000 - Bank loan = 50000 - Common stock = 60000 - Interest expense = 4000 - Dividend paid = 4800 - Tax rate = 25% - Interest after tax = 3000 3. **Formulas and Explanation:** - ROI (Return on Investment) = $\frac{Net\ Profit}{Total\ Assets} \times 100$% - Cost of capital = $\frac{Interest\ after\ tax + Dividend}{Bank\ loan + Common\ stock} \times 100$% - Target profit = $Cost\ of\ capital \times (Bank\ loan + Common\ stock)$ - Residual income = $Net\ profit - Target\ profit$ - WACC (Weighted Average Cost of Capital) = $\frac{Bank\ loan}{Total\ capital} \times Cost\ of\ debt + \frac{Common\ stock}{Total\ capital} \times Cost\ of\ equity$ - EVA (Economic Value Added) = $Net\ operating\ profit\ after\ tax - (Total\ capital \times WACC)$ - Profit margin = $\frac{Net\ profit}{Sales} \times 100$% - TATO (Total Asset Turnover) = $\frac{Sales}{Total\ assets} \times 100$% 4. **Calculations:** - Total capital = Bank loan + Common stock = 50000 + 60000 = 110000 - ROI = $\frac{36000}{200000} \times 100 = 18$% - Cost of capital = $\frac{3000 + 4800}{110000} \times 100 = \frac{7800}{110000} \times 100 = 7.09$% - Target profit = $7.09\% \times 110000 = 0.0709 \times 110000 = 7799$ - Residual income = $36000 - 7799 = 28201$ - Cost of debt = $\frac{Interest\ after\ tax}{Bank\ loan} = \frac{3000}{50000} = 0.06 = 6\%$ - Cost of equity = $\frac{Dividend}{Common\ stock} = \frac{4800}{60000} = 0.08 = 8\%$ - WACC = $\frac{50000}{110000} \times 6\% + \frac{60000}{110000} \times 8\% = 0.4545 \times 6 + 0.5455 \times 8 = 2.727 + 4.364 = 7.09$% - EVA = $36000 - (110000 \times 0.0709) = 36000 - 7799 = 28201$ - Profit margin = $\frac{36000}{80000} \times 100 = 45$% - TATO = $\frac{80000}{200000} \times 100 = 40$% 5. **Final Answers:** - ROI = 18% - Cost of capital = 7.09% - Target profit = 7799 - Residual income = 28201 - WACC = 7.09% - EVA = 28201 - Profit margin = 45% - TATO = 40%