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marks Window Help [] 42%, Fri 6:53 PM ezto.mheducation.com 0 HOMEWORK 1 Question 63 (of 100) Save & Exit Submit 63. 100 points value Problem 3-36 DuPont Identity [LO 3 Some recent financial statements for Smolira Golf, Inc., follow. SMOLIRA GOLF, INC. Balance Sheets as of December 31, 2015 and 2016 2015 2016 2015 2016 Assets Liabilities and Owners' Equity Current assets Current liablities 2,941 4,722 s 2,198 2,690 2,206 116 Cash 2,857 Accounts payable 5,691Notes payable 1,795 13,692 $20,321 $ 22.240 12,658 Other $4,092 5,012 $14,200 $ 16,960 Total Total Long-term debt Owners' equity Common stock and paid-in surplus Accumulated retained earnings $42,500 $42,500 39.769 358,199 $82,269 Fixed assets 15,699 Net plant and equipment $56,170 $ 82001 Total Total assets $76,491 $104,241 Total iabilities and owners' equity $76,491 $104,241 SMOLIRA GOLF, INC. 2016 Inoome Statement Sales Cost of goods sold EBIT Interest paid Taxable income Taxes Net income $189.170 127,103 5,243 $ 56,824 1,340 $ 55,484 19,419 S 36,065 Dividends Retained earnings 11,995 24,070

Explanation / Answer

Profit Margin = Net Income/ Sales = 36,065/189,170 = 19.06%
Total Asset Turnover = Sales/ Total Assets = 189,170/104241= 0.52
Equity Multiplier = Total Assets/ Equity = 104241/82269 = 1.27

ROE = Net Income/ Sales * Sales/ Total Assets * Total Assets/ Equity = 36,065/189,170 * 189,170/104241 * 104241/82269 = 43.84%

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