Question

The comparative financial statements prepared at December 31, 2015, for Prince Company showed the following summarized data:

	2015			2014
Income statement:
Sales revenue	$	190,600	*	$	168,300
Cost of goods sold		112,700			101,300
Gross profit		77,900			67,000
Operating expenses and interest expense		56,700			53,700
Pretax income		21,200			13,300
Income tax		7,800			3,900
Net income	$	13,400		$	9,400
Balance sheet:
Cash	$	4,600		$	5,700
Accounts receivable (net)		14,500			17,300
Inventory		40,900			32,400
Operational assets (net)		46,600			36,100
	$	106,600		$	91,500
Current liabilities (no interest)	$	14,100		$	15,100
Long-term liabilities (10% interest)		43,600			43,600
Common stock (par $5)		29,500			29,500
Retained earnings		19,400			3,300
	$	106,600		$	91,500

1.What is the gorss profit percentage?

2. What was the income tax rate?

3.Compute the profit margin:

4.What percentave of total resources was invested in operational assets?

5.Compute the debt-to-equity ratio:

6. What was the return on equity?

7.What was the return on assets?

8. Compute the financial leverage percentage:

Answer 1