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Intro
Use the following information to answer the questions:
| Assets | | Liabilities and Equity |
| Cash | 11,000 | | Accounts payable | 18,000 |
| Marketable securities | 2,000 | | Notes payable | 6,000 |
| Accounts receivable | 5,000 | | Current liabilities | 24,000 |
| Inventory | 30,000 | | Long-term debt | 95,000 |
| Current assets | 48,000 | | Total liabilities | 119,000 |
| Machines | 34,000 | | Paid-in capital | 20,000 |
| Real estate | 80,000 | | Retained earnings | 23,000 |
| Fixed assets | 114,000 | | Equity | 43,000 |
| Total assets | 162,000 | | Total liab. & equity | 162,000 |
| Line item | Value |
| Sales | 81,000 |
| - Operating expenses | 66,420 |
| - Depreciation | 2,000 |
| = EBIT | 12,580 |
| - Interest | 800 |
| = Taxable income | 11,780 |
| - Taxes | 3,887 |
| = Net income | 7,893 |
Attempt 2/10 for 10 pts.
Part 1
What is the profit margin (aka net profit margin)?
Correct
Profit margin=Net incomeSales=7,89381,000=Profit margin=Net incomeSales=7,89381,000= 0.0974
Attempt 1/10 for 10 pts.
Part 2
What is the return on assets (aka return on total assets)?
Correct
ROA=Net incomeBV of total assets=7,893162,000==Net incomeBV of total assets=7,893162,000= 0.04872
Attempt 1/10 for 10 pts.
Part 3
What is the return on equity (aka return on common equity)?
Answer & Explanation
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