Exercise 12-10 Sunland Medical manufactures hospital beds and other institutiona

Question

Exercise 12-10 Sunland Medical manufactures hospital beds and other institutional furniture. The company's comparative balance sheet and income statement for 2015 and 2016 follovw Sunland Medical Comparative Balance Sheet As of December 31 2016 2015 Assets Current assets Cash Accounts receivable, net Inventory Other current assets $347,000 $417,400 776,400 681,100 247,100 2,483,600 2,122,000 8,379,350 $11,515,910 $10,501,350 1,066,600 731,000 339,000 Total current assets Property, plant, & equipment, net 9,032,310 Total assets Liabilities and Stockholders' Equity Current liabilities Long-term debt $3,149,000 $2,846,100 3,892,700 6,738,800 53,500 103,800 3,605,250 3,762,550 $11,515,910 $10,501,350 3,702,700 6,851,700 53,500 112,000 4,498,710 4,664,210 Total liabilities Preferred stock, $5 par value Common stock, $0.25 par value Retained earnings Total stockholders' equity Total liabilities and stockholders equity

Explanation / Answer

1). Gross margin percentage= Gross profit / Sales revenue
= 5186000 / 10350000 = 0.5010 or 50.10%

2). Return on Assets = Net Income / Average total assets
= 1366950 / 11008630 = 0.1241 or 12.41%
Average total assets = (11515910+10501350) / 2 =11008630

3). Return on common stockholder's equity = (Net income - Preffered dividend) / Av Common stockholder's equity
=(1366950 - 29500) / 4159880 = 1337450 / 4159880 = 0.3215 or 32.15%
Average common stockholders equity ((4664210-53500) + (3762550-53500)) / 2 = 4159880

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