MBA 5010 Week 8 Assignment (Rev 2)
The weekly assignments are intended to be completed individually. It is important in an online program that you pay careful attention to when it is and is not appropriate to work with peers. Misunderstandings can have significant consequences. By submitting this assignment, you are attesting that you completed this work without assistance from another current or former student of this class. Exceptions can be made for tutors, but only with prior consent from your instructor.
Your answer will be evaluated based on correctness, completeness, and clarity. Be attentive to your writing. You have until midnight CST Sunday to submit both parts of this assignment.
Part A (25 points)
Based on the balance sheet and income statement for Tonka Trucking LLC, calculate the following ratios:
Question 1 – Total Asset Turnover
Respond here
Question 2 – Gross Profit Margin
Respond here
Question 3 – Debt to Asset Ratio
Respond here
Question 4 – Net Profit Margin
Respond here
Question 5 – Calculate and then explain Tonka’s unusually high Return on Equity.
Respond here
Tonka Trucking LLC – Balance Sheet | |||
Assets | |||
Current Assets | |||
Cash | $50,000 | ||
Accounts Receivable | $40,000 | ||
Inventory | $10,000 | ||
Total Current Assets | $100,000 | ||
Fixed Assets | |||
Gross Equipment $500,000 | |||
Accumulated Depreciation ($200,000) | |||
Net Equipment | $300,000 | ||
Total Fixed Assets | $300,000 | ||
Total Assets | $400,000 | ||
Liabilities and Owners Equity | |||
Current Liabilities | |||
Accounts Payable | $50,000 | ||
Total Current Liabilities | $50,000 | ||
Long-term Liabilities | |||
Long-term Debt | $50,000 | ||
Total Long-term Liabilities | $50,000 | ||
Total Liabilities | $100,000 | ||
Owner’s Equity | |||
Common Stock (1,000 shares) | $100,000 | ||
Retained Earnings | $200,000 | ||
Total Owner’s Equity | $300,000 | ||
Total Liabilities and Owner’s Equity | $400,000 | ||
Tonka Trucking LLC Income Statement | |||
Revenue | $400,000 | ||
Cost of Goods Sold | ($50,000) | ||
Gross Profit | $350,000 | ||
Selling, General, and Administrative Expenses | ($100,000) | ||
Depreciation Expense | ($50,000) | ||
Earnings Before Interest and Taxes (EBIT) | $200,000 | ||
Interest Expense | ($50,000) | ||
Income Tax Expense | ($40,000) | ||
Net Income | $110,000 |
Part B (25 points)
You are to complete a FINAL response to the following questions. The class will be divided into groups so you and your peers may collaborate on Part B of this assignment. This final response will be evaluated on content as well as completeness and clarity.
This week we will return one last time to the sharing economy. Your assignment is to develop the concept for a new business for this market space. For example, you may decide that there ought to be a business coordinating the sharing of lawn mowers. (You don’t have to pull a Fred Smith on this assignment.)
There are two main deliverables. First, you’re to work out the value proposition including target market, problem addressed, your solution, and the points of difference between your solution and what’s currently available. Limit this part to 500 words, if possible.
Second, you’re to specify how your business might attempt to capture some portion of the value generated and answer whether that value would be sufficient to build a viable business. Limit this part to roughly 250 words.
Respond here
Expert Solution Preview
Introduction:
As a medical professor, I am not an expert in business and finance. However, I will do my best to provide a thorough and accurate answer to the MBA 5010 Week 8 Assignment (Rev 2). The assignment consists of two parts, and I will answer each question separately.
Part A:
Question 1 – Total Asset Turnover
Total Asset Turnover = Revenue / Total Assets
Total Asset Turnover = $400,000 / $400,000
Total Asset Turnover = 1.0
Question 2 – Gross Profit Margin
Gross Profit Margin = Gross Profit / Revenue
Gross Profit Margin = $350,000 / $400,000
Gross Profit Margin = 0.875 or 87.5%
Question 3 – Debt to Asset Ratio
Debt to Asset Ratio = Total Liabilities / Total Assets
Debt to Asset Ratio = $100,000 / $400,000
Debt to Asset Ratio = 0.25 or 25%
Question 4 – Net Profit Margin
Net Profit Margin = Net Income / Revenue
Net Profit Margin = $110,000 / $400,000
Net Profit Margin = 0.275 or 27.5%
Question 5 – Calculate and then explain Tonka’s unusually high Return on Equity.
Return on Equity (ROE) = Net Income / Owner’s Equity
ROE = $110,000 / $300,000
ROE = 0.3667 or 36.67%
Tonka Trucking LLC has a high ROE because the owner’s equity is relatively low compared to the net income. This indicates that Tonka is generating a high return on the money invested by the owners. However, it is important to note that a high ROE may not always be sustainable or desirable in the long term.
Part B:
For the sharing economy concept, my idea is a business that coordinates the sharing of high-end camera equipment. The target market would be professional photographers and videographers who need access to expensive gear but don’t want to invest in purchasing it themselves. The problem addressed is the high cost of camera equipment and the limited availability of certain items. The solution is a platform that connects owners of high-end camera equipment with renters who need it. The points of difference between this solution and what’s currently available are the focus on high-end equipment, a trusted network of owners, and insurance coverage for rentals.
To capture value, the business would charge a commission on each rental transaction. The commission would be set at a level that allows the business to cover its costs and generate a profit. The value generated would need to be sufficient to build a viable business, which would depend on factors such as the size of the target market, the level of demand, and the level of competition. However, the sharing economy model has proven successful in many industries, and there is potential for a camera equipment sharing business to be profitable.
