Last Year Sabin Electronics Comparative Balance Sheet This Year Assets Current assets: Cash $ 150, Bee Marketable securities Accounts receivable, net 737, Bee Inventory 1,145, Bee Prepaid expenses 38, Total current assets 2,eze, eee Plant and equipment, net 2,388,888 Total assets $ 4,378,8ee Liabilities and Stockholders Equity Liabilities: Current liabilities $ 900,0 Bonds payable, 12% 9ee, see Total liabilities 1,800,eee Stockholders' equity: Common stock, $20 par 890,000 Retained earnings 1,688,888 Total stockholders' equity 2,570,8ee Total liabilities and stockholders' equity $ 4,379,8e0 $ 350,000 17,wee See, Bee 795, eee 42, 1,784,80 1,53e, eee $ 3, 234, eee $ 420,00 900, eee 1.328,888 890,000 1,024,280 1 .914, eee $ 3, 234, eee Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $ 6. eae.ee Cost of goods sold 4, 275, eee Gross margin 1,925, eee Selling and administrative expenses 693. Bee Net operating income 1.232.ee Interest expense 108, eee Net income before taxes 1,124, see Income taxes (38%) 337.2ee Net income 786, see Common dividends 130, eee Net income retained 656,88 Beginning retained earnings 1,824,800 Ending retained earnings $1.688.88 Last Year $4.95e.ee 3,65e,eee 1,300,eee 588, eee 712,eee 108,eee 604, eee 181, 2ee 422,800 1e9.eee 313, see 71e, 2ee $ 1.024.ee During the past year, the company introduced several new product lines and raised the selling prices on a number of old product lines in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territories. Sales terms are 3/10, n/30. All sales are on account. Assume Paul Sabin has asked you to assess his company's profitability and stock market performance. 2 You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. c. The return on total assets. (Total assets at the beginning of last year were $3.194.000.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,904,000.) e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. (Round your percentage answers to 1 decimal place.) b. The net profit margin percentage. (Round your percentage answers to 1 decimal place.) c. The return on total assets. (Total assets at the beginning of last year were 53, 194,000.) (Round your percentage answers to 1 decimal place.) d. The return on equity. (Stockholders' equity at the beginning of last year was $1,904,000.) (Round your percentage answers to 1 decimal place.) e. Is the company's financial leverage positive or negative? Show less This Year Last Year a. Gross margin percentage b. Net profit margin percentage c. Return on total assets d. Return on equity e. Financial Leverage
