Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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The financial statements for Castile Products, Incorporated are given below:
Castile Products, Incorporated
Balance Sheet
December 31
Assets
Current assets:
$ 23,000
230,000
390,000
8,000
651,000
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Total current assets
Property and equipment, net
820,000
Total assets
$ 1,471,000
Liabilities and Stockholders' Equity
Liabilities:
$ 250,000
360,000
610,000
Current liabilities
Bonds payable, 10%
Total liabilities
Stockholders' equity:
Common stock, $10 per value
Retained earnings
Total stockholders' equity
$ 170,000
691,000
861,000
Total liabilities and stockholders' equity
$ 1,471,000
Castile Products, Incorporated
Income Statement
For the Year Ended December 31
$ 2,190,000
1,230,000
960,000
620,000
Sales
Cost of goods sold
Gross margin
Selling and administrative expenses
Net operating income
Interest expense
340,000
36,000
304,000
91,200
Net income before taxes
Income taxes (30%)
Net income
$ 212,800
Account balances at the beginning of the year were: accounts receivable, $230,000; and inventory, $270,000. All sales were on
account. Assets at the beginning of the year totaled $1,000,000, and the stockholders' equity totaled $645,000.
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Transcribed Image Text:The financial statements for Castile Products, Incorporated are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: $ 23,000 230,000 390,000 8,000 651,000 Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net 820,000 Total assets $ 1,471,000 Liabilities and Stockholders' Equity Liabilities: $ 250,000 360,000 610,000 Current liabilities Bonds payable, 10% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity $ 170,000 691,000 861,000 Total liabilities and stockholders' equity $ 1,471,000 Castile Products, Incorporated Income Statement For the Year Ended December 31 $ 2,190,000 1,230,000 960,000 620,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense 340,000 36,000 304,000 91,200 Net income before taxes Income taxes (30%) Net income $ 212,800 Account balances at the beginning of the year were: accounts receivable, $230,000; and inventory, $270,000. All sales were on account. Assets at the beginning of the year totaled $1,000,000, and the stockholders' equity totaled $645,000.
Required:
Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should
be entered as 12.34).)
1. Gross margin percentage.
2. Net profit margin percentage.
3. Return on total assets.
4. Return on equity.
5. Was financial leverage positive or negative for the year?
1. Gross margin percentage
%
2. Net profit margin percentage
%
3. Return on total assets
%
4. Return on equity
%
5. Financial Leverage
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Transcribed Image Text:Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage. 2. Net profit margin percentage. 3. Return on total assets. 4. Return on equity. 5. Was financial leverage positive or negative for the year? 1. Gross margin percentage % 2. Net profit margin percentage % 3. Return on total assets % 4. Return on equity % 5. Financial Leverage
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