Question

Last Year Sabin Electronics Comparative Balance Sheet This Year Assets Current assets: Cash $ 150, Bee Marketable securities Accounts receivable, net 737, Bee Inventory 1,145, Bee Prepaid expenses 38, Total current assets 2,eze, eee Plant and equipment, net 2,388,888 Total assets $ 4,378,8ee Liabilities and Stockholders Equity Liabilities: Current liabilities $ 900,0 Bonds payable, 12% 9ee, see Total liabilities 1,800,eee Stockholders' equity: Common stock, $20 par 890,000 Retained earnings 1,688,888 Total stockholders' equity 2,570,8ee Total liabilities and stockholders' equity $ 4,379,8e0 $ 350,000 17,wee See, Bee 795, eee 42, 1,784,80 1,53e, eee $ 3, 234, eee $ 420,00 900, eee 1.328,888 890,000 1,024,280 1 .914, eee $ 3, 234, eee Sabin Electronics Comparative Income Statement and Reconciliation This Year Sales $ 6. eae.ee Cost of goods sold 4, 275, eee Gross margin 1,925, eee Selling and administrative expenses 693. Bee Net operating income 1.232.ee Interest expense 108, eee Net income before taxes 1,124, see Income taxes (38%) 337.2ee Net income 786, see Common dividends 130, eee Net income retained 656,88 Beginning retained earnings 1,824,800 Ending retained earnings $1.688.88 Last Year $4.95e.ee 3,65e,eee 1,300,eee 588, eee 712,eee 108,eee 604, eee 181, 2ee 422,800 1e9.eee 313, see 71e, 2ee $ 1.024.ee

Answer 1

Answer with working notes is given below

Gross margin percentage Gross profit Sales This year $1,925,000 32.1% $6,000,000 Last year $1,300,000 $4,950,000 b) Net profit margin percentage Net Profit Sales $786,800 $6,000,000 13.1% $422,800 $4,950,000 8.5% c) Return on Total Assets Net profit Average Total Assets $786,800 $3,802,400 20.7% $422,800 $3,214,000 13.2% d) Return on Equity Net profit Average Stockholders equity 35.1% $700,000 $2,242,400 9422,000 $422,800 $1,909,000 22.1% Times Times d) Financial leverage Operating Income Operating profit before taxes $1,232,000 $1,124,000 1.10 $712,000 $604,000 1.18 Finance leverage is positive Working notes: Average Total Assets Opening Total Assets Closing Total Assets Average Total Assets (Opening + Closing)/2 This year $3,234,000 $4,370,800 $3,802,400 Last year $3,194,000 $3,234,000 $3,214,000 Average Stockholders' Equity Opening Stockholders' Equity Closing Stockholders' Equity Average Stockholders' Equity (Opening +Closing)/2 This year $1,914,000 $2,570,800 $2,242,400 Last year $1,904,000 $1,914,000 $1,909,000