Some recent financial statements for Smollra Golf Corp. follow SMOLIRA GOLF CORP

Question

Some recent financial statements for Smollra Golf Corp. follow SMOLIRA GOLF CORP. 2017 and 2018 Balance Sheets Assets Liabillities and Owners Equity 2018 $23,076 25.400 16,500 28,400 64,076 70,300 2017 2017 2018 Current assets Current llablities Cash Accounts $ 24,484 28.400 12,100 17,500 $51,355 58,000 $82,000 91,741 Accounts payable Notes payable Other 13,748 14,000 recelvable Inventory 27,252 12,871 Total Total Long-term debt Owners' equity Common stock and pald-In45,000 45,000 surplus Accumulated retained 223,416 239,659 earnings FIxed assets Net plant and $337695 364,100 Total $268.416 $284,659 equipment Total llabilities and owners equity Total assets $401771 $434,400 $ 401,771 $434,400 SMOLIRA GOLF CORP 2018 Income Statement Sales Cost of goods sold Depreclation $352,549 229,000 41.400 Earnings before Interest $ 82149 15,600 $66,549 and taxes Interest paid Taxable Income Taxes (23%) | 15,306 Net Income $51,243 Dividends Retalned earnings $35.000 16,243 The company's profit margin is percent rounded to 2 decimal places, e.g., 32.16.) The equity multiplier is percent. (Use year-end figures rather than average values where appropriate. Enter your answer as a The total asset turnover is times. (Round your answer to 2 decimal places, e.g., 32.16.) Using the DuPont Identity, the company's ROE is times Round your answer to 2 decimal places, e.g., 32.16.) percent (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Explanation / Answer

Profit Margin = Net Income / Sales
Profit Margin = $51,243 / $352,549
Profit Margin = 14.54%

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = $352,549 / $434,400
Total Asset Turnover = 0.81

Equity Multiplier = Total Assets / Total Owner’s Equity
Equity Multiplier = $434,400 / $284,659
Equity Multiplier = 1.53

Return on Equity = Profit Margin * Total Asset Turnover * Equity Multiplier
Return on Equity = 14.54% * 0.81 * 1.53
Return on Equity = 18.02%

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