Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Please show workings, thank you!! :) The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current

image text in transcribed

image text in transcribed

Please show workings, thank you!! :)

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses $ 21,000 220,000 390,000 10,000 Total current assets Property and equipment, net 641,000 890,000 Total assets $1,531,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 9% $ 300,000 380,000 680,000 Total liabilities Stockholders' equity: Common stock, $5 par value Retained earnings $ 150,000 701,000 Total stockholders' equity 851,000 Total liabilities and stockholders' equity $1,531,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $2,170,000 Cost of goods sold 1,170,000 Gross margin Selling and administrative expenses 1,000,000 590,000 Net operating income Interest expense 410,000 34,200 Net income before taxes Income taxes (30%) 375,800 112,740 Net income $ 263,060 Account balances at the beginning of the year were: accounts receivable, $230,000; and inventory, $270,000. All sales were on account. Assets at the beginning of the year totaled $1,100,000, and the stockholders' equity totaled $635,000. Required: Compute the following: 1. Gross margin percentage. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Gross margin percentage 2. Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).) Net profit margin percentage 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) Return on total assets 4. Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) Return on equity % 5. Was financial leverage positive or negative for the year? Positive Negative

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial And Managerial Accounting Information For Decisions

Authors: John Wild, Ken Shaw, Barbara Chiappetta

7th Edition

1259726703, 9781259726705

More Books

Students also viewed these Accounting questions