Some recent financial statements for Smolira Golf Corp. follow SMOLIRA GOLF CORP

Question

Some recent financial statements for Smolira Golf Corp. follow SMOLIRA GOLF CORP. 2014 and 2015 Balance Sheets Assets Liabilities and Owners' Equity 2015 2014 2015 Current assets Current liabilities Cash Accounts receivable Inventory S 24,076 12,748 25,742 S 24,400 15,500 27,400 Accounts payable Notes payable Other $ 23,484 13,000 11,871 $ 27,400 11,100 17,500 Total $ 62,566 $ 67,300 Total $ 48,355 $ 56,000 $ 72,000 $ 84,000 Long-term debt Owners' equity Common stock and paid-in surplus Accumulated retained earnings 45,000 224,906 $ 45,000 245,000 Fixed assets Net plant and equipment $327,695 $362,700 Total $269,906 $290,000 Total assets $390,261 $430,000 otal liabilities and owners' equity $390,261 $430,000

Explanation / Answer

Profit margin = (Net Profit / Sales) x 100 = ($43,094 / $378,618) x 100 = 11.381920563% or 11.38%

Total asset turnover = Sales / Total assets = $378,618 / $430,000 = 0.88050698 times or 0.88 times

Equity multiplier = Total assets / Owner's Equity = $430,000 / $290,000 = 1.48275862 times or 1.48 times

ROE as per du pont = Profit margin x Total asset turnover x Equity multiplier = 11.381920563% x 0.88050698 x 1.48275862 = 14.86%

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