034 The 2013 income statement for Anderson TV and Appliance reported sales reven

Question

034 The 2013 income statement for Anderson TV and Appliance reported sales revenue of $260,000 and net income of $95,000. Average total assets for 2013 was $650,000. Shareholders' equity at the beginning of the year was $350,000 and $40,000 was paid to shareholders as dividends. There were no other shareholders' equity transactions that occurred during the year. Required: Calculate the profit margin on sales, return on assets, and returm on shareholders' equity for 2013. Profit margin Return on assets Return on shareholders equity

Explanation / Answer

Profit Margin = Net Profit / Sales Revenue

Profit Margin = $ 95000 / $ 260000 = 36.54 %

Return on assets = Net Income / Average total assets

Return on assets = $ 95000 / $ 650000 = 14.62%

Return on Shareholders Equity = Net Income / Shareholders Equity

Return on Shareholders Equity = $ 95000 / $ 350000 = 27.14%

Related Questions

Navigate

• Browse (All)
• Browse
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.