FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Martha's Enterprises spent $2,400 to purchase
equipment three years ago. This equipment is currently
valued at $1,800 on today's balance sheet but could
actually be sold for $2,000. Net working capital is $200
and long-term debt is $800. Assuming the equipment is
the firm's only fixed asset, what is the book value of
shareholders' equity?
The following amounts were reported by the
two companies:
Raiden Inc. Nash Company
Net Income
$42,000
$55,000
Total Assets
$75,000
$94,000
Total Liabilities $40,000
$60,000
Total Revenues $120,000
$137,500
Required:
1.Calculate each company's net profit margin
expressed as a percent.
2. Which company has generated a greater
return of profit from each revenue dollar?
State the basis for your answer.
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Transcribed Image Text:Martha's Enterprises spent $2,400 to purchase equipment three years ago. This equipment is currently valued at $1,800 on today's balance sheet but could actually be sold for $2,000. Net working capital is $200 and long-term debt is $800. Assuming the equipment is the firm's only fixed asset, what is the book value of shareholders' equity? The following amounts were reported by the two companies: Raiden Inc. Nash Company Net Income $42,000 $55,000 Total Assets $75,000 $94,000 Total Liabilities $40,000 $60,000 Total Revenues $120,000 $137,500 Required: 1.Calculate each company's net profit margin expressed as a percent. 2. Which company has generated a greater return of profit from each revenue dollar? State the basis for your answer.
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