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

Question

The financial statements for Castile Products, Inc., are given below Castile Products, Inc Balance Shee December 31 Assets Current assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses $ 24,000 260,000 380,000 9,000 Total current assets Property and equipment, net 673,000 820,000 Total assets $1,493,000 Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 11% S 290,000 380,000 670,000 S 180,000 Total liabilities Stockholders' equity Common stock, $5 par value Retained earnings 643,000 823,000 $1,493,000 Total stockholders' equity Total liabilities and stockholders' equity Castile Products, Inc Income Statement For the Year Ended December 31 Sales Cost of goods sold $2,240,000 1,170,000 Gross margin Selling and administrative expenses 1,070,000 660,000 Net operating income Interest expense 410,000 41,800 Net income before taxes Income taxes (30%) 368,200 110,460 Net income $ 257,740

Explanation / Answer

1. GROSS PROFIT MARGIN = (GROSS PROFIT *100) / NET SALES = [1070000 * 100] / 2240000 = 47.77%

2. NET PROFIT MARGIN = (NET PROFIT *100) / NET SALES = [257740 * 100] / 2240000 = 11.51%

3. RETURN ON TOTAL ASSETS = (EBIT *100) / TOTAL ASSETS = [410000 * 100] / 1493000 = 27.46%

4. RETURN ON EQUITY = (NET PROFIT *100) / SHAREHOLDERS EQUITY INCLUDING RETAINED EARNINGS = [257740 * 100] / 823000 = 31.32%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.