The financial statements for Tyler Toys, Inc. are shown below: Tyler Toys, Inc.
ID: 2576485 • Letter: T
Question
The financial statements for Tyler Toys, Inc. are shown below:
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,147,284
$13,566,242
Cost of goods sold
$-8,447,972
$-8,131,820
Selling, general, and administrative expenses
$-998,929
$-980,567
Depreciation
$-1,498,902
$-1,471,804
EBIT
$3,201,481
$2,982,051
Interest expense
$-376,550
$-355,690
Taxes
$-1,073,474
$-998,017
Net income
$1,751,457
$1,628,344
Tyler Toys, Inc.
Balance Sheet as of December 31, 2013 and 2014
ASSETS
2014
2013
LIABILITIES
2014
2013
Current assets
Current liabilities
Cash
$190,960
$187,717
Accounts payable
$1,546,438
$1,456,557
Investments
$180,694
$121,981
Short-term debt
$312,991
$332,368
Accounts receivable
$668,874
$631,942
Total current liabilities
$1,859,429
$1,788,925
Inventory
$587,460
$564,107
Long-term liabilities
Total current assets
$1,627,988
$1,505,747
Debt
$7,285,831
$6,604,692
Long-term assets
Other liabilities
$1,463,135
$1,346,661
Investments
$3,053,885
$2,827,209
Total liabilities
$10,608,395
$9,740,278
Plant, property, and equipment
$8,496,835
$8,480,917
OWNERS’ EQUITY
Goodwill
$347,017
$347,567
Common stock
$1,458,918
$1,453,692
Intangible assets
$1,157,027
$957,595
Retained earnings
$2,615,439
$2,925,065
Total owners’ equity
$4,074,357
$4,378,757
TOTAL LIABILITIES
TOTAL ASSETS
$14,682,752
$14,119,035
AND OWNERS’ EQUITY
$14,682,752
$14,119,035
Calculate the profit margin, return on assets, and return on equity for 2013 and 2014 for Tyler Toys. Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or theshareholders?
What is the profit margin for 2014?
(Round to two decimal places.)
What is the profit margin for 2013?
(Round to two decimal places.)
What is the return on assets for 2014?
(Round to two decimal places.)
What is the return on assets for 2013?
(Round to two decimal places.)
What is the return on equity for 2014?
(Round to two decimal places.)
What is the return on equity for 2013?
(Round to two decimal places.)
Should any of these ratios or the change in a ratio warrant concern for the managers of Tyler Toys or the shareholders?(Select the best response.)
A.These ratios indicate a somewhat weak firm performance for the equity holders with an ROE of over 42.99 %for 2014.
B.These ratios indicate a somewhat strong firm performance for the equity holders with an ROE of over 42.99% for 2013.
C.These ratios indicate a somewhat weak firm performance for the equity holders with an ROE of over 42.99%for 2013.
D.These ratios indicate a somewhat strong firm performance for the equity holders with an ROE of over 42.99% or 2014.
Tyler Toys, Inc.
Income Statement for Years Ending December 31, 2013 and 2014
2014
2013
Revenue
$14,147,284
$13,566,242
Cost of goods sold
$-8,447,972
$-8,131,820
Selling, general, and administrative expenses
$-998,929
$-980,567
Depreciation
$-1,498,902
$-1,471,804
EBIT
$3,201,481
$2,982,051
Interest expense
$-376,550
$-355,690
Taxes
$-1,073,474
$-998,017
Net income
$1,751,457
$1,628,344
Explanation / Answer
2014 2013 Profit margin 1751457/14147284= 1628344/13566242= 12.38% 12% Return on assets 1751457/14682752= 1628344/14119035= 11.93% 11.53% Return on Equity 1751457/4074357= 1628344/4378757= 42.99% 37.19% D.These ratios indicate a somewhat strong firm performance for the equity holders with an ROE of over 42.99% or 2014.
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