Question

Edman Company is a merchandiser that has provided the following balance sheet and income statement for this year.

		Beginning Balance			Ending Balance
Assets
Cash	$	62,800		$	150,000
Accounts receivable		160,000			180,000
Inventory		230,000			240,000
Property, plant & equipment (net)		833,000			793,000
Other assets		37,000			37,000
Total assets	$	1,322,800		$	1,400,000
Liabilities & Stockholders’ Equity
Accounts payable	$	70,000		$	80,000
Bonds payable		550,000			550,000
Common stock		410,000			410,000
Retained earnings		292,800			360,000
Total liabilities & stockholders’ equity	$	1,322,800		$	1,400,000

		This Year
Sales	$	2,500,000
Variable expenses:
Cost of goods sold		1,600,000
Variable selling expense		240,000
Total variable expenses		1,840,000
Contribution margin		660,000
Fixed expenses:
Fixed selling expenses		220,000
Fixed administrative expenses		300,000
Total fixed expenses		520,000
Net operating income		140,000
Interest expense (8%)		44,000
Net income before tax		96,000
Tax expense (30%)		28,800
Net income	$	67,200

What is this alternative’s estimated net profit margin percentage, total asset turnover, equity multiplier, and return on equity (ROE)?

1. Net Profit margin % ______

2. Total asset turnover ______

3. Equity Multiplier ____

4. ROE - Return on Equity ______

Answer 1