Question

Brief Exercise 222 Selected data from the Florida Fruit Company are presented below: Total assets Average total assets Net income Net sales Average common stockholders' equity Net cash provided by operating activities $1,500,000 1,850,000 175,000 1,300,000 1,000,000 275,000 Assuming that no dividends were declared or paid during the period. Calculate the profit margin. (Round answer to 1 decimal place, e.g. 15.2%.) Profit margin Compute asset turnover. (Round answer to 2 decimal places, e.g. 0.25.) times Asset turnover Compute return on assets. (Round answer to 1 decimal place, e.g. 15.2%.) Return on assets Compute return on common stockholders' equity - (Round answer to 1 decimal place, e.g. 15.2%.) Return on common stockholders' equity

Answer 1

Profit Margin

Profit Margin = [Net Income / Net Sales] x 100

= [$175,000 / $1,300,000] x 100

= 13.5%

Asset Turnover

Asset Turnover = Total Sales / Average total assets

= $1,300,000 / $1,850,000

= 0.70 Times

Return on asset

Return on asset = [Net Income / Average total assets] x 100

= [$175,000 / $1,850,000] x 100

= 9.5%

Return on common stockholders equity

Return on common stockholders equity = [Net Income / Average common stockholders equity] x 100

= [$175,000 / $1,000,000] x 100

= $17.5%