35.-40. ROA RATIO ANALYSIS Calculate the Rate of Return on and Two for the ratios listed below. Food Products, Inc. are available course Web site. Complete thes provided for use in formulas that requ the Rate of Return on Assets (ROA) for Crawford Food Products, Inc. at Levels One r the ratios listed below. The Balance Sheet and Income Statement for Crawion cts, Inc. are available in an Excel file at the "Content" "Exam Three" link at our o site. Complete these calculations for YEAR TWO ONLY. Year One data is ise in formulas that require averages. Note that the income tax rate is 3570. 1. Level One: ROA on a company-wide basis 2. Level Two: Components of ROA on a company-wide basis a. Profit Margin for ROA: b. Total Assets Turnover: 3. Based on your analysis, what is firm's information from Year On d on your analysis, what is the trend you see in Crawford's ROA? (Assum Vlord's ROA? (Assume that the Level One ROA: 2.05%; Level Two Profit Margin: 1.95%: Level Two Total Asset Turnover 1.0537.) 4. Level 3a: Common-size expense ratios for various cost items a. "Cost of Goods Sold" common-size %: b. "Operating Expenses" common-size %: 5. Level 3b: Turnover rates for individual assets a. Accounts Receivables Turnover: b. Inventory Turnover: CRAWFORD FOOD PRODUCTS, INC. BALANCE ODUCTS, INC. BALANCE SHEET YEAR 2 116,900 ASSETS: Cash Accounts Receivable Inventory Total Current Assets YEAR 1 75,300 75,000 85 550 52,000 254,450 49,200 199,500 240,000 494,450 Net Property. Plant & Equipmt. TOTAL ASSETS 275,000 474,500 LIABILITIES AND EQUITY: Accounts Payable Notes Payable Current Portion of L.T. Debt Total Current Liabilities: 63,500 25,000 24,000 112,500 85,900 33,000 28,000 146,900 Long-Term Debt Total Liabilities 190,000 302,500 172,000 318,900 40.000 Preferred Stock - Common Stock ** Retained Earnings Total Equity 40,000 50,000 82,000 172,000 85,550 175,550 TOTAL LIABILITIES & EQUITY: 474,500 494,450 *1,000 shares of preferred stock outstanding with a par value of $40.00 per share; **2.500 shares of common stock outstanding with a par value of $20.00 per share CRAWFORD FOOD PRODUCTS, INC. INCOME STATEMENT Sales Less: Cost of Goods Sold Gross Margin Less: Operating Expenses EBIT Less: Interest Expense Pre-Tax Income Less: Income Tax Ex. 35% Net Income YEAR 1 500,000 310.000 190,000 175,000 15,000 25,000 -10,000 -3,500 -6,500 YEAR 2 625,000 378,000 247,000 203.000 44,000 27.000 17.000 5.950 11,050