Selected comparative statement data for Molini Products Company are presented be

Question

Selected comparative statement data for Molini Products Company are presented below. All balance sheet data are as of December 31.

2014
2013 Net sales
$703,510
$681,210 Cost of goods sold
482,190
402,140 Interest expense
7,980
5,560 Net income
43,570
35,340 Accounts receivable
124,960
105,280 Inventory
80,230
77,140 Total assets
584,000
537,860 Total common stockholders Selected comparative statement data for Molini Products Company are presented below. All balance sheet data are as of December 31. Compute the following ratios for 2014. (Round all answers to 1 decimal place, e.g. 1.6, or 1.6% .)

Explanation / Answer

Profit margin = net income/sales = 43,570 / 703,510 = 6.2%

Asset turnover = sales / average assets = 703,510 / ((584,000+537,860)/2) = 1.3

Return on assets = net income / average assets = 43,570 / ((584,000+537,860)/2) = 7.8%

Return on common equity = net income / average common equity = 43,570 / ((429,810+328,510)/2) = 11.5%

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