Accounts payable= 45,000

Question

Accounts receivable= 122,400

Accruals= 13,500

Additional paid in capital= 216,660

Cash= 21,058

Common Stock @ par value= 42,000

COGS= 179,106.00

Depreciation expense= 22,119.00

Interest expense= 16,749.00

Inventories= 115,200

Long-term debt= 139,498.00

Net fixed assets= 399,600

Notes payable= 64,800

Operating expenses (excl. depr.)= 62,080.00

Retained earnings= 136,800

Sales= 338,431.00

Taxes= 18,725.00
Net profit margin= 11.72%
Net income= 39,652
Gross profit margin= 47.08%
Operating profit margin= 22.20%
Cost of goods sold on a common-sized= 52.92%
Operating expense on a common-sized= 18.34%
What is the current year's return on assets (ROA)?

Answer 1

To calculate the Return on Assets (ROA), we need to determine the total assets and then use the formula for ROA:

\[ \text{ROA} = \frac{\text{Net Income}}{\text{Total Assets}} \]

Step 1: Calculate Total Assets

Total Assets can be calculated as the sum of current assets and long-term assets. In this case, we have the following information:

1. Current Assets:

   • Accounts Receivable: \( 122,400 \)
   • Cash: \( 21,058 \)
   • Inventories: \( 115,200 \)
   • Accruals: \( 13,500 \) (not an asset)

   Therefore, Current Assets = Accounts Receivable + Cash + Inventories: \[ \text{Current Assets} = 122,400 + 21,058 + 115,200 = 258,658 \]

2. Long-Term Assets:

   • Net Fixed Assets: \( 399,600 \)

Total Assets Calculation:

\[ \text{Total Assets} = \text{Current Assets} + \text{Net Fixed Assets} = 258,658 + 399,600 = 658,258 \]

Step 2: Calculate ROA

Now, using the net income \( 39,652 \):

\[ \text{ROA} = \frac{39,652}{658,258} \]

Calculating that gives:

\[ \text{ROA} = 0.0602 \text{ or } 6.02% \]

Final Answer:

The current year's Return on Assets (ROA) is approximately 6.02%.

Answer 2

What is the current year's return on equity (ROE)?

Answer 3

To calculate the Return on Equity (ROE), we use the following formula:

\[ \text{ROE} = \frac{\text{Net Income}}{\text{Total Equity}} \]

Step 1: Calculate Total Equity

Total Equity can be calculated as the sum of common stock, additional paid-in capital, and retained earnings.

From the information you provided:

• Common Stock at par value: \( 42,000 \)
• Additional Paid-In Capital: \( 216,660 \)
• Retained Earnings: \( 136,800 \)

Now, we can calculate Total Equity:

\[ \text{Total Equity} = \text{Common Stock} + \text{Additional Paid-In Capital} + \text{Retained Earnings} \]

\[ \text{Total Equity} = 42,000 + 216,660 + 136,800 \]

Calculating that gives:

\[ \text{Total Equity} = 395,460 \]

Step 2: Calculate ROE

Now, we can calculate ROE using the net income, which is \( 39,652 \):

\[ \text{ROE} = \frac{39,652}{395,460} \]

Calculating that gives:

\[ \text{ROE} = 0.1003 \text{ or } 10.03% \]

Final Answer:

The current year's Return on Equity (ROE) is approximately 10.03%.

Answer 4

What is the current year's entry for long-term debt on a common-sized balance sheet?

Answer 5

To prepare a common-sized balance sheet, each line item is expressed as a percentage of total assets. In this case, we'll calculate the common-sized entry for long-term debt.

Step 1: Identify Long-term Debt

From the data provided, the long-term debt is:

\[ \text{Long-term Debt} = 139,498.00 \]

Step 2: Calculate Total Assets

From previous calculations, we found that total assets are:

\[ \text{Total Assets} = 658,258.00 \]

Step 3: Calculate the Common-Sized Entry for Long-term Debt

The common-sized entry for long-term debt can be calculated as follows:

\[ \text{Common-sized Long-Term Debt} = \left( \frac{\text{Long-term Debt}}{\text{Total Assets}} \right) \times 100 \]

Substituting the values:

\[ \text{Common-sized Long-Term Debt} = \left( \frac{139,498}{658,258} \right) \times 100 \]

Calculating that gives:

\[ \text{Common-sized Long-Term Debt} \approx 21.17% \]

Final Answer:

The current year's entry for long-term debt on a common-sized balance sheet is approximately 21.17%.