Question

Chapter 03 Pre-Built Problems x1GGoogle Image Result forhrtpe x XG how to find sevenue- Google С https://newconnectm Chapter 03 Pre-Built Problems 10 Some recent financial statements for Smolira Golf Corp. follow 10 SMOLIRA GOLF CORP 2017 and 2018 Balance Sheets Assets Liabilities and Owners' Equity 2017 2018 Current assets Current liabilities Cash s 24056 24.200 12.548 15.300Notes payabie 25,592 27200Other Accounts payable Notes payable 23.284 s 27.200 10,900 11,671 15.900 12,000 ventory Tota $ 62196 66,700Total s 46,955 54000 Long term debt $ 90,000 93,294 Owners equity Common stock and paid-n s 42000 42000 208,936 earnings Fixed assets Net plant and $325.695 $365,300 Total $250,936 $284706 s 387891 $432,000 Total liabilities and owners s 387891 $432,000 equity Total assets SMOLIRA GOLF CORP 2018 Income Statement Sales Cost of goods sold Depreciation $336,329 231,000 21,600 Earnings before interest s 83,729 14.400 and taxes Interest paid K Prey 10 of 10 Next >

please show calculations on how to solve problem.

Answer 1

Profit Margin = Net Income / Sales
Profit Margin = $54,770 / $336,329
Profit Margin = 0.1628 or 16.28%

Total Asset Turnover = Sales / Total Assets
Total Asset Turnover = $336,329 / $432,000
Total Asset Turnover = 0.78

Equity Multiplier = Total Assets / Total Equity
Equity Multiplier = $432,000 / $284,706
Equity Multiplier = 1.52

Return on Equity = Profit Margin * Total Asset Turnover * Equity Multiplier
Return on Equity = 16.28% * 0.78 * 1.52
Return on Equity = 19.30%