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Edit Vew History Bookmarks Tools Window Help s in mework 12 Help Save& Exit Submit Exercise 15-5 Financial Ratios for Assessing Profitability [LO15-5) 10 Comparative financlal statements for Weller Corporation, a merchandising company fo The company did not issue any interest rate on the bond payable was 12%,the income tax r year and $0.40 this year. The market value of the company's common stock at are on account for the year ending December 31 appear below new common stock during the yeat A total of 840,000 shares of common stock were outstanding. The per share of common stock was $0.75 last the end of this year was $20. All of the company's sales rate was 40%, and the Comparative Balance Sheet This Year Last rrent sssets 6,344 #6,400 Propersy and equigeest Daildings and eqaipment, set Liabilities and Shockholders tqity 9.900

Explanation / Answer

Solution.

Q1. Gross margin percentage.

Formula = Gross profit / Net sales

Gross margin percentage = $29,000 / $93,000 = 31.2%

Q2. Net profit margin percentage.

Formula = Net profit / Total revenue

Net profit margin percentage.= $3,900 / $93,000 = 4.2%.

Q3. Return on total assets.

Formula = EBIT / Average total asset

Return on total assets = $7.700 / {($56,784+$52,040)/2}

Return on total assets = 14.2%

Q4. Return on equity.

Formula = Net income / shareholder Equity

Return on equity. = $3,900 / $35,814 = $0.12 Per Equity.

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