The financial statements for Castile Products, Inc., are given below: Account ba
ID: 2497853 • Letter: T
Question
The financial statements for Castile Products, Inc., are given below:
Account balances at the beginning of the year were: accounts receivable, $210,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,010,000, and the stockholders’ equity totaled $695,000.
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 % = Gross margin /sales
= 1,000,000 / 2190000
= .4566 or 45.66%
2)Net margin = net income /sales
= 223510 / 2190000
= .1021 or 10.21%
3)Return on total asset = net income /average asset
= 223510 / (1010000+1458000)/2
= 223510 /(2468000/2)
= 223510 / 1234000
= .1811 or 18.11%
4)Return on equity =net income /average equity
= 223510/ (695000+818000)/2
= 223510 / (1513000/2)
= 223510 /756500
= .2955 or 29.55%
5) positive as operating income before interest and tax is positive.
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