Question: Consider the following condensed financial statements of Safe Money, Inc. The company's target rate of return is 40% Requirements 1. Calculate the company's ROI. Round all of your answers to four decimal places. 2. Calculate the company's profit margin ratio. Interpret your results. 3. Calculate the company's asset turnover ratio. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. 5. Calculate the company's RI. Interpret your results. 2013 Safe Money, Inc. Comparative Balance Sheet As of December 31, 2014 and 2013 2014 Assets Cash $ 75,000 $ Accounts Receivable 60,200 Supplies 1,800 Property, plant and Equipment, net 298,000 Patents, net 157.000 $ 592,000 $ Total Assets Liabilities and Stockholders' Equity Accounts Payable 28,000 $ Short-term Notes Payable 147,000 Long-term Notes Payable 195,000 Common Stock, no Par 199,000 Retained Earnings 23,000 $ 592,000 $ Total Liabilities and Stockholders' Equity 63,000 28,800 1,200 207,000 108,000 408,000 30,000 53,000 125,500 187,000 12,500 408,000 Safe Money, Inc. Income Statement For the Year Ended December 31, 2014 Sales Revenue $ 7,000,000 4,200,000 Cost of Goods Sold Gross Profit 2,800,000 Operating Expenses 2,450,000 Operating Income 350,000 (33,000) Other Expenses: Interest Expense Income Before Income Tax Expense 317,000 Income Tax Expense (110,950) 206,050 Net Income Question: Consider the following condensed financial statements of Safe Money, Inc. The company's target rate of return is 40% Requirements 1. Calculate the company's ROI. Round all of your answers to four decimal places. 2. Calculate the company's profit margin ratio. Interpret your results. 3. Calculate the company's asset turnover ratio. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. Interpret your results. 5. Calculate the company's RI. Interpret your results. 2013 Safe Money, Inc. Comparative Balance Sheet As of December 31, 2014 and 2013 2014 Assets Cash $ 75,000 $ Accounts Receivable 60,200 Supplies 1,800 Property, plant and Equipment, net 298,000 Patents, net 157.000 $ 592,000 $ Total Assets Liabilities and Stockholders' Equity Accounts Payable 28,000 $ Short-term Notes Payable 147,000 Long-term Notes Payable 195,000 Common Stock, no Par 199,000 Retained Earnings 23,000 $ 592,000 $ Total Liabilities and Stockholders' Equity 63,000 28,800 1,200 207,000 108,000 408,000 30,000 53,000 125,500 187,000 12,500 408,000 Safe Money, Inc. Income Statement For the Year Ended December 31, 2014 Sales Revenue $ 7,000,000 4,200,000 Cost of Goods Sold Gross Profit 2,800,000 Operating Expenses 2,450,000 Operating Income 350,000 (33,000) Other Expenses: Interest Expense Income Before Income Tax Expense 317,000 Income Tax Expense (110,950) 206,050 Net Income
