Curren 1 Teal Z Tears At December 31 Assets Year Ago Ago $ $ Cash $ 31,800 35,250 37,600 Accounts receivable, net 89,300 63,000 50,000 Merchandise inventory 110,500 83,800 53,500 Prepaid expenses 10,750 9,300 5,500 Plant assets, net 281,000 248,000 234,000 $ $ $ Total assets 523,350 439,350 380,600 Liabilities and Equity $ $ $ Accounts payable 128,400 73,750 50,000 Long-term notes payable 96,500 101,750 81,600 Common stock, $10 par 163,500 163,500 163,500 value Retained earnings 134,950 100,350 85,500 Total liabilities and $ $ $ equity 523,350 439,350 380,600 The company's income statements for the Current Year and 1 Year Ago, follow. For Year Ended Current Year December 31 1 Year Ago $ $ Sales 735,000 560,000 $ $ Cost of goods sold 441,000 358,400 Other operating 227,850 134,400 expenses Interest expense 11,300 12,900 Income tax expense 9,350 8,800 Total costs and 689,500 514,500 expenses Net income Earnings per share For both the Current Year and 1 Year Ago, compute the following ratios: $ 45,500 $ 45,500 $ 2.78 $ 2.78 (1-a) Compute profit margin ratio for the current year and one year ago. (1-b) Did profit margin improve or worsen in the Current Year versus 1 Year Ago? Complete this question by entering your answers in the tabs below. Required Required 1A 1B Compute profit margin ratio for the current year and one year ago. Profit Margin Ratio Numerator: I Denominator: 1 Profit Margin Ratio Profit margin ratio Current Year: 1 Year 1 = 0/ Following are data for BioBeans and GreenKale, which sell organic produce and are of similar size. Average total assets Net sales Net income GreenKale BioBeans $ $ 220,000 115,000 13,200 169,500 50,850 5,000 1a. Compute the profit margin for both companies. 1b. Compute the return on total assets for both companies. 2. Based on analysis of these two measures, which company is the preferred investment? Complete this question by entering your answers in the tabs below. Required Required Required 1A 1B 2 Compute the profit margin for both companies. Profit margin Numerator: Denominator: Profit margin ratio Profit margin ratio BioBeans GreenKale % % < Required 1A Required 1B > Roak Company and Clay Company are similar firms that operate in the same industry. Clay began operations 2 years ago and Roak started 5 years ago. In the current year, both companies pay 8% interest on their debt to creditors. The following additional information is available. Roak Company Current 1 Year 2 Years Year Ago Ago Clay Company Current 1 Year Year 2 Years Ago Ago Total asset 4.7 4.4 4.6 3.1 3.1 2.7 turnover Return on 10.0% 12.8% 13.4% 6.9% 6.6% 6.3% total assets Profit 4.0% 4.1% 3.9% 6.0% 6.2% 6.1% margin ratio Sales $490,000 $460,000 $476,000 $290,000 $250,000 $190,000 1. (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? 2. Which company has the better rate of growth in sales? 3. Did the company successfully use financial leverage in the current year, as judged by return on assets exceeding its interest rate on debt, in the case of (a) Roak and (b) Clay? Complete this question by entering your answers in the tabs below. Required Required Required 1 2 3 (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? (a) Which company has the better profit margin? (b) Which has the better asset turnover? (c) Which has the better return on assets? < Required 1 Required 2 >