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 2014 2015 2014 2015 Current assets Current liabilities $ 24,116 Cash Accounts receivable Inventory 13,148 26,392 $ 24,800 15,900 27,800 Accounts payable Notes payable Other $ 23,884 17,000 12,271 $ 27,800 11,500 15,700 Total $ 63,656 $ 68,500 Total $ 53,155 $ 55,000 $ 76,000 $ 94,000 Long-term debt Owners' equity Common stock and paid-in surplus 40,000 226,196 $ 40,000 245,000 Accumulated retained earnings Total Total liabilities and owners' equity Fixed assets Net plant and equipment $331,695 $365,500 $266,196 $285,000 Total assets $395,351 $434,000 $395,351 $434,000 SMOLIRA GOLF CORP 2015 Income Statement Sales Cost of goods sold $396,340 256,000 49 00n

Explanation / Answer

Answer

Profit Margin = Net Income / Total Sales

For Child = 6 / 100 = 6%

For store = 18.6 / 620 = 3%

Answer )

Return on equity = Net Income / Total Equity

Net income of store = 18.6 million

Total Assets = Total Liabilities + Total equity

350 = 220 + Total equity

Total Equity = 350-220 = 130 million

ROE of store = 18.6 / 130 =14.3%

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