Question

The financial statements for Castile Products, Inc., are given below:

Castile Products, Inc. Balance Sheet December 31
Assets
Current assets:
Cash				$	22,000
Accounts receivable, net					230,000
Merchandise inventory					370,000
Prepaid expenses					10,000
Total current assets					632,000
Property and equipment, net					860,000
Total assets				$	1,492,000
Liabilities and Stockholders' Equity
Liabilities:
Current liabilities				$	280,000
Bonds payable, 8%					400,000
Total liabilities					680,000
Stockholders’ equity:
Common stock, $10 par value				$	180,000
Retained earnings					632,000
Total stockholders’ equity					812,000
Total liabilities and stockholders' equity				$	1,492,000

Castile Products, Inc. Income Statement For the Year Ended December 31
Sales	$	2,190,000
Cost of goods sold		1,230,000
Gross margin		960,000
Selling and administrative expenses		640,000
Net operating income		320,000
Interest expense		32,000
Net income before taxes		288,000
Income taxes (30%)		86,400
Net income	$	201,600

     Account balances at the beginning of the year were: accounts receivable, $140,000; and inventory, $330,000. All sales were on account. Assets at the beginning of the year totaled $1,030,000, and the stockholders’ equity totaled $625,000.

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).)

      

2.	Net profit margin percentage. (Round your answer to the nearest whole percentage place (i.e., 0.1234 should be entered as 12%).)

       

3.	Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

       

4.	Return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)

       

5.

Was financial leverage positive or negative for the year?

	Positive
	Negative

Answer 1

If you have any doubts ask in comments section

Do rate the answer