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The financial statements for Castile Products, Incorporated are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash $ 24,000 Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Sales Castile Products, Incorporated Income Statement For the Year Ended December 31 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income 260,000 380,000 8,000 672,000 820,000 $ 1,492,000 $ 260,000 400,000 660,000 $ 150,000 682,000 832,000 $ 1,492,000 $ 2,260,000 1,250,000 1,010,000 640,000 370,000 44,000 326,000 97,800 $ 228,200 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,040,000, and the stockholders' equity totaled $675,000. Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage. 2. Net profit margin percentage. 3. Return on total assets. 4. Return on equity. 5. Was financial leverage positive or negative for the year? 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity 5. Financial Leverage % % % %

The financial statements for Castile Products, Incorporated are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash $ 24,000 Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Sales Castile Products, Incorporated Income Statement For the Year Ended December 31 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income 260,000 380,000 8,000 672,000 820,000 $ 1,492,000 $ 260,000 400,000 660,000 $ 150,000 682,000 832,000 $ 1,492,000 $ 2,260,000 1,250,000 1,010,000 640,000 370,000 44,000 326,000 97,800 $ 228,200 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,040,000, and the stockholders' equity totaled $675,000. Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage. 2. Net profit margin percentage. 3. Return on total assets. 4. Return on equity. 5. Was financial leverage positive or negative for the year? 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity 5. Financial Leverage % % % %

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter16: Financial Statement Analysis
Section: Chapter Questions
Problem 4PB
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The financial statements for Castile Products, Incorporated are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Sales Castile Products, Incorporated Income Statement For the Year Ended December 31 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income $ 24,000 260,000 380,000 8,000 672,000 820,000 $ 1,492,000 $ 260,000 400,000 660,000 $ 150,000 682,000 832,000 $ 1,492,000 $ 2,260,000 1,250,000 1,010,000 640,000 370,000 44,000 326,000 97,800 $ 228,200 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,040,000, and the stockholders' equity totaled $675,000. Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage. 2. Net profit margin percentage. 3. Return on total assets. 4. Return on equity. 5. Was financial leverage positive or negative for the year? 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity 5. Financial Leverage % % % %
Transcribed Image Text:The financial statements for Castile Products, Incorporated are given below: Castile Products, Incorporated Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, net Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 11% Total liabilities Stockholders' equity: Common stock, $10 per value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity Sales Castile Products, Incorporated Income Statement For the Year Ended December 31 Cost of goods sold Gross margin Selling and administrative expenses Net operating income Interest expense Net income before taxes Income taxes (30%) Net income $ 24,000 260,000 380,000 8,000 672,000 820,000 $ 1,492,000 $ 260,000 400,000 660,000 $ 150,000 682,000 832,000 $ 1,492,000 $ 2,260,000 1,250,000 1,010,000 640,000 370,000 44,000 326,000 97,800 $ 228,200 Account balances at the beginning of the year were: accounts receivable, $220,000; and inventory, $320,000. All sales were on account. Assets at the beginning of the year totaled $1,040,000, and the stockholders' equity totaled $675,000. Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) 1. Gross margin percentage. 2. Net profit margin percentage. 3. Return on total assets. 4. Return on equity. 5. Was financial leverage positive or negative for the year? 1. Gross margin percentage 2. Net profit margin percentage 3. Return on total assets 4. Return on equity 5. Financial Leverage % % % %
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