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11 Dec 2019

If current assets are $90,000 and total assets are $270,000, what percentage of total assets are current assets?

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Casey Durgan
Casey DurganLv2
13 Dec 2019
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The financial statements for Castile Products, Inc., are givenbelow:

Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 19,000
Accounts receivable, net220,000
Merchandise inventory 330,000
Prepaid expenses 8,000

Total current assets 577,000
Property and equipment, net 850,000

Total assets $ 1,427,000

Liabilities and Stockholders' Equity
Liabilities:
Current liabilities $ 270,000
Bonds payable, 12% 390,000

Total liabilities 660,000
Stockholders’ equity:
Common stock, $5 par value $140,000
Retained earnings 627,000

Total stockholders’ equity 767,000

Total liabilities and stockholders' equity $1,427,000

Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,250,000
Cost of goods sold 1,170,000

Gross margin 1,080,000
Selling and administrative expenses 570,000

Net operating income 510,000
Interest expense 46,800

Net income before taxes 463,200
Income taxes (30%) 138,960

Net income $ 324,240

Account balances at the beginningof the year were: accounts receivable, $190,000; and inventory,$310,000. All sales were on account. Assets at the beginning of theyear totaled $1,050,000, and the stockholders’ equity totaled$645,000.

Required:
Compute the following:

1.

Gross margin percentage. (Round your percentage answer to 2decimal places (i.e., 0.1234 should be entered as 12.34).)


2.

Net profit margin percentage. (Round your answer to the nearestwhole percentage place (i.e., 0.1234 should be entered as12%).)


3.

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


4.

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


5. Was financial leverage positive or negative for theyear?

Positive
Negative

Calculate the external financing needed given the following financial statements. Assume that all costs, all assets, and accounts payable change proportionally with sales. Sales are projected to grow by 25%. Also assume that the company is operating at full capacity.

Current Statement of Comprehensive Income Sales $50,000 CoGS 30,000 EBDIT 20,000 Depreciation 10,000 EBIT 10,000 Interest expense 5,000 Taxable income 5,000 Taxes (35%) 1,750 Net Income 3,250 Dividends 975 Addition to RE 2,275

Current Statement of Financial Position Cash $8,000 Accounts receivable 22,000 Inventory 30,000 Total current assets 60,000 Fixed assets 90,000 Total assets $150,000 Accounts payable $15,000 Notes payable 5,000 Total current liabilities 20,000 Long-term debt 40,000 Common stock 40,000 Retained earnings 50,000 Total owners’ equity 90,000 Total Liabilities and OE $150,000

Select one answer

A- $33,750

B- $34,656.25

C- $30,906.25

D- $37,500

E- $22,500

The financial statements for Castile Products, Inc., are givenbelow:

Castile Products, Inc.
Balance Sheet
December 31
Assets
Current assets:
Cash $ 19,000
Accounts receivable, net 200,000
Merchandise inventory 350,000
Prepaid expenses 12,000
Total currentassets 581,000
Property andequipment, net 860,000
Total assets $ 1,441,000
Liabilitiesand Stockholders' Equity
Liabilities:
Current liabilities $ 290,000
Bonds payable, 11% 320,000
Totalliabilities 610,000
Stockholders’equity:
Common stock, $5 par value $ 120,000
Retained earnings 711,000
Total stockholders’equity 831,000
Total liabilitiesand stockholders' equity $ 1,441,000
Castile Products, Inc.
Income Statement
For the Year Ended December 31
Sales $ 2,170,000
Cost of goodssold 1,180,000
Gross margin 990,000
Selling andadministrative expenses 580,000
Net operatingincome 410,000
Interestexpense 35,200
Net income beforetaxes 374,800
Income taxes(30%) 112,440
Net income $ 262,360

Account balances at the beginningof the year were: accounts receivable, $240,000; and inventory,$270,000. All sales were on account. Assets at the beginning of theyear totaled $1,090,000, and the stockholders’ equity totaled$645,000.

Required:
Compute the following:
1.

Gross margin percentage. (Round your percentage answerto 2 decimal places (i.e., 0.1234 should be entered as12.34).)


2.

Net profit margin percentage. (Round your answer to thenearest whole percentage place (i.e., 0.1234 should be entered as12%).)


3.

Return on total assets. (Round your percentage answer to1 decimal place (i.e., 0.1234 should be entered as12.3).)


4.

Return on equity. (Round your percentage answer to 1decimal place (i.e., 0.1234 should be entered as12.3).)


5. Was financial leverage positiveor negative for the year?
Positive
Negative

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