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

Question

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

     Account balances at the beginning of the year were: accounts receivable, $190,000; and inventory, $280,000. All sales were on account. Assets at the beginning of the year totaled $1,010,000, and the stockholders’ equity totaled $675,000.

Gross margin percentage. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).)

Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

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

Explanation / Answer

1.

Gross margin percentage = Gross margin / sales = 930,000/ 2,130,000 = 43.66%

2.

Net profit margin = Net income / sale = 204,050/2,130,000 = 9.57%

3.

Return on total assets = Net income / average total assets = Net income / ((asset in the beginning of the period + asset in the end of the period)/2) = 204,050/((1,010,000+1,401,000)/2)

Return on total assets = 16.92%

4.

Return on equity = Net income / average shareholders’ equity = Net income / ((equity at the beginning of the year + equity at the end of the year)/2) = 204,050 / ((675000 + 771000)/2)

Return on equity = 28.22%

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

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