Income statement: Sales $10,000 Cost of goods sold 9,200 EBIT &n

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Question

Income statement: Sales $10,000 Cost of goods sold 9,200 EBIT &n

Income statement:

Sales $10,000

Cost of goods sold 9,200

EBIT $ 800

Interest (10%) 400

EBT $ 400

Taxes (40%) 160

Net Income $ 240

Balance sheet:

Cash $ 20

A/R 1,000

Inventories 5,000

Total C.A. $ 6,020 Debt $ 4,000

Net F.A. 2,980 Equity 5,000

Total Assets $ 9,000 Total claims $ 9,000

What is Inventory Turn Over Ratio?

Was the company profitable? Yes/No

What is Return on Equity ?

What is Return on Total Assets?

business finance

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Answer 1

Answer #1

HI

Here Inventory Turn over ratio = Cost of goods sold/average inventory

=9200/500 = 1.84 times

Since Net Income of company is positive hence company is profitable

Return on equity = Net Income / total equity = 240/5000 = 4.80%

Return on total Asset = Net Income/ Total asset = 240/9000 = 2.67%

Thanks

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Answer 2

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