The financial statements for Castile Products, Inc., are given below: Castile Pr

Question

The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses $19,000 230,000 370,000 10,000 Total current assets Property and equipment, net 629,000 870,000 Total assets $1,499,000 Liabilities and Stockholders' Equity Liabilities Current liabilities Bonds payable, 10% $ 280,000 360,000 640,000 $180,000 Total liabilities Stockholders' equity: Common stock, $10 par value Retained earnings 679,000 859,000 $1,499,000 Total stockholders' equity Total liabilities and stockholders' equity

Explanation / Answer

Answer 1.

Gross Margin Percentage = Gross Margin / Sales
Gross Margin Percentage = $930,000 / $2,100,000
Gross Margin Percentage = 44.3%

Answer 2.

Net Profit Margin Percentage = Net Income / Sales
Net Profit Margin Percentage = $219,800 / $2,100,000
Net Profit Margin Percentage = 10.5%

Answer 3.

Return on Total Assets = Net Income / Total Assets
Return on Total Assets = $219,800 / $1,499,000
Return on Total Assets = 14.7%

Answer 4.

Return on Equity = Net Income / Stockholders’ Equity
Return on Equity = $219,800 / $859,000
Return on Equity = 25.6%

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