Question

Some recent financial statements for Smolira Golf Corp. follow.

  

SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets
Assets									Liabilities and Owners’ Equity
	2014				2015					2014				2015
Current assets									Current liabilities
Cash	$	23,046			$	25,100			Accounts payable	$	24,184			$	28,100
Accounts receivable		13,448				16,200			Notes payable		20,000				11,800
Inventory		26,822				28,100			Other		12,571				19,100
Total	$	63,316			$	69,400			Total	$	56,755			$	59,000
									Long-term debt	$	79,000			$	90,000
									Owners’ equity
									Common stock and paid-in surplus	$	48,000			$	48,000
									Accumulated retained earnings		214,256				237,000
Fixed assets
Net plant and equipment	$	334,695			$	364,600			Total	$	262,256			$	285,000
Total assets	$	398,011			$	434,000			Total liabilities and owners’ equity	$	398,011			$	434,000

SMOLIRA GOLF CORP. 2015 Income Statement
Sales					$	349,760
Cost of goods sold						241,500
Depreciation						27,200
Earnings before interest and taxes					$	81,060
Interest paid						15,300
Taxable income					$	65,760
Taxes (35%)						23,016
Net income					$	42,744
Dividends	$	20,000
Retained earnings		22,744

  

The company's profit margin is  percent. (Use year-end figures rather than average values where appropriate. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) The total asset turnover is  times. (Round your answer to 2 decimal places, e.g., 32.16.) The equity multiplier is  times. (Round your answer to 2 decimal places, e.g., 32.16.) Using the Du Pont Identity, the company's ROE is  percent. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

profit margin of the company 2015: net income/ sales using ear end figures

$42744/$349760 = 0.1222

the total asset turnover = sales/ total assets ( using year end figures )

= $3,49760/ total assets

thereofore, asset turnover = $349760/$434000 = 0.8059 times

the equity multiplier is total assets / total equity =$434000/ 285000 = 1.52 times

the du pont identity to finding ROE:

NI/ SALES * SALES / ASSETS * ASSETS / EQUITY

total assets /total equity = $434000/ 285000= 1.52 times

= 0.1222 * 0.8059 * 1.52

=14.97%