Question

Condensed statement of financial position and income statement data for Elkhardt Ltd. are shown below:

ELKHARDT LTD. Statement of Financial Position December 31 (in thousands)
		2018		2017		2016
Assets
Current assets
Cash		$29		$79		$199
Accounts receivable		898		706		502
Inventory		1,198		798		498
Total current assets		2,125		1,583		1,199
Property, plant, and equipment (net)		4,124		3,777		3,168
Total assets		$6,249		$5,360		$4,367
Liabilities and Shareholders’ Equity
Liabilities
Current liabilities		$600		$547		$502
Non-current liabilities		3,044		2,307		1,505
Total liabilities		3,644		2,854		2,007
Shareholders’ equity
Common shares		995		995		995
Retained earnings		1,610		1,511		1,365
Total shareholders’ equity		2,605		2,506		2,360
Total liabilities and shareholders’ equity		$6,249		$5,360		$4,367

ELKHARDT LTD. Income Statement Year Ended December 31 (in thousands)
		2018		2017		2016
Sales (all on credit)		$4,473		$4,009		$3,602
Cost of goods sold		2,503		2,113		1,812
Gross profit		1,970		1,896		1,790
Operating expenses		1,436		1,475		1,498
Income from operations		534		421		292
Interest expense		191		129		70
Income before income tax		343		292		222
Income tax expense		86		73		56
Net income		$257		$219		$166

(f1) X Your answer is incorrect. Calculate the asset turnover for each of the three years. Assume that total assets at the end of 2015 were equal to total assets at the end of 2016. Multiply the asset turnover for each year by the profit margin for each year from part (c) above to determine the return on assets for each year. (Round asset turnover to 2 decimal palces, e.g. 5.26 and return on assets to 1 decimal place, e.g. 5.2%.) 2016 2017 2018 0.8 Asset turnover times 0.8 0.8 times times Return on assets eTextbook and Media Attempts: 1 of 10 used Save for Later Submit Answer

Answer 1

	2016	2017	2018
Asset Turnover	0.77	0.82	0.82
Return on Assets	4.4%	4.5%	3.8%

Notes

Ratio	Formulae	Break Down	2018	2017	2016
Net Profit Margin	Net Income/Net Sales	Net Income	257	218	166
		Net Sales	4473	4009	3602
		Net Profit Margin	5.75%	5.44%	4.61%
Assets Turnover Ratio	Net Sales/Average Total Assets	Net Sales	4473	4009	3602
		Average Total Assets	5804.5	4863.5	4367
		Assets Turnover Ratio	0.77	0.82	0.82
Return on Assets	Net Profit Margin*Asset Turnover	ROA	4.4%	4.5%	3.8%

A. В Е F Break Down 232 Ratio Formulae 2018 2017 2016 233 Net Profit Margin Net Income/Net Sales Net Income 257 218 166 234 Net Sales 4473 4009 3602 Net Profit Margin -D233 / D234 235 -E233/E234 =F233/F234 236 237 Assets Turnover Ratio Net Sales/Average Total Assets Net Sales 4473 4009 3602 4367+ 4367 ) /2 238 =(6249+5360)/2 (5360+4367) /2 Average Total Assets Assets Turnover RatioD237/D238 239 -E237/E238 F237/F238 240 Net Profit Margin*Asset Turnover 241 Return on Assets ROA D235 D239 -E235*E239 F235 *F239

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