The financial statements for Castile Products, Inc., are given below Account bal

Question

The financial statements for Castile Products, Inc., are given below

Account balances at the beginning of the year were: accounts receivable, $170,000; and inventory, $310,000. All sales were on account. Assets at the beginning of the year totaled $1,020,000, and the stockholders’ equity totaled $705,000.

Compute the following: Round your percentage answer 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?

Castile Products, Inc.
Balance Sheet
December 31   Assets   Current assets:      Cash $ 19,000      Accounts receivable, net 190,000      Merchandise inventory 350,000      Prepaid expenses 9,000   Total current assets 568,000   Property and equipment, net 910,000   Total assets $ 1,478,000   Liabilities and Stockholders' Equity   Liabilities:      Current liabilities $ 280,000      Bonds payable, 10% 340,000   Total liabilities 620,000   Stockholders’ equity:      Common stock, $5 par value $ 160,000      Retained earnings 698,000   Total stockholders’ equity 858,000   Total liabilities and stockholders' equity $ 1,478,000

Explanation / Answer

Gross Margin Percentage = Gross Profit/ Sales*100 =1080000/2250000*100 48 Net Profit Margin Percentage = Net Profit/ Sales*100 =326200/2250000*100 14.50 Return on Assets = Net Income/ Average Assets*100 =326200/1249000*100 26.12 Average Assets =(1020000+1478000)/2 1249000

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