The balance sheets for Plasma Screens Corporation and additional information are

Question

The balance sheets for Plasma Screens Corporation and additional information are provided below PLASMA SCREENS CORPORATION Balance Sheets December 31, 2018 and 2017 2018 2017 Assets Current assets: Cash Accounts receivable Inventory Investments $160,000 116,000 88,000 76,000 1,600 70,000 91,000 3,600 Long-term assets Land Equipment Less: Accumulated depreciation 440,000 750,000 (388,000) 440,000 630,000 (228,000) Total assets $ 1,126,600 $ 1,123,600 Liabilities and Stockholders' Equity Current liabilities Accounts payable Interest payable Income tax payable $ 95,200 $ 81,000 11,600 4,600 5,500 7,500 120,000 660,000 Long-term liabilities Notes payable 240,000 Stockholders' equity: Common stock Retained earnings 660,000 126,400 238,400 Total liabilities and stockholders' equity $1,126,600 $ 1,123,600 Additional information for 2018: 1. Net income is $112,000 2. Sales on account are $1,382,500 3. Cost of goods sold is $1,077,150

Explanation / Answer

a) Gross profit ratio = (1382500-1077150)/1382500 = 22.1%

b) Return on assets = 112000*100/1125100 = 9.9%

c) Profit margin = 112000*100/1382500 = 8.1%

d) Asset turnover = 1382500/1125100 = 1.2 Times

e) Return on equity = 112000*100/842400 = 13.3%

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