Task: Compute the federal tax liability (Wendt Corp) and DuPont Analysis (Gardial & Sons)
PART A:
1. What is Wendt Corporation federal income tax liability if they had $10,500,000 in taxable income?
2. If Wendt Corp receives an additional $1,000,000 in taxable interest income, how does the tax liability change?
3. Instead of taxable interest income, assume Wendt received an additional $1,000,000 in dividends on stock it own. How does this change the tax liability?
PART B:
If their return on assets is 12%, the profit margin on sales is 5%, and the return on equity is 20%, what is Gardial & Son's total asset turnover? What is the equity multiplier?