Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $ 5,300,000 Long-term debt (9% interest rate) $ 730,000 Total stockholders' equity $ 2,500,000 Interest paid on long-term debt $ 65,700 Net income $ 400,000 Total assets at the beginning of the year were $5, 100,000; total stockholders' equity was $2,300,000. The company's tax rate is 40 % . Required: 1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Is financial leverage positive or negative?

Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $ 5,300,000 Long-term debt (9% interest rate) $ 730,000 Total stockholders' equity $ 2,500,000 Interest paid on long-term debt $ 65,700 Net income $ 400,000 Total assets at the beginning of the year were $5, 100,000; total stockholders' equity was $2,300,000. The company's tax rate is 40 % . Required: 1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Is financial leverage positive or negative?

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 50E: Juroe Company provided the following income statement for last year: Juroes balance sheet as of...

See similar textbooks

Similar questions

Juroe Company provided the following income statement for last year: Juroes balance sheet as of December 31 last year showed total liabilities of 10,250,000, total equity of 6,150,000, and total assets of 16,400,000. Required: Note: Round answers to two decimal places. 1. Calculate the times-interest-earned ratio. 2. Calculate the debt ratio. 3. Calculate the debt-to-equity ratio.
Ernst Companys balance sheet shows total liabilities of 32,500,000, total stockholders equity of 8,125,000, and total assets of 40,625,000. Required: Note: Round answers to two decimal places. 1. Calculate the debt ratio. 2. Calculate the debt-to-equity ratio.
Given the following year-end information for Somerset Corporation, compute its basic earnings per share. Net income, 13,000 Preferred dividends declared, 4,000 Weighted average common shares for the year, 4,500
Income Statement Ratio The income statement of Holly Enterprises shows operating revenues of $134,800, selling expenses of $38,310, general and administrative expenses of $36,990, interest expense of $580, and income tax expense of $13,920. Hollys stockholders equity was $280,000 at the beginning of the year and $320,000 at the end of the year. The company has 20,000 shares of stock outstanding at the end of the year. Required Compute Hollys profit margin. What other information would you need in order to comment on whether this ratio is favorable?
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows: Includes both state and federal taxes. Brief Exercise 15-20 Calculating the Average Common Stockholders Equity and the Return on Stockholders Equity Refer to the information for Somerville Company on the previous pages. Required: Note: Round answers to four decimal places. 1. Calculate the average common stockholders equity. 2. Calculate the return on stockholders equity.
James Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is the EPS for the year for James (rounded to the nearest dollar)?
Brunleigh Corporation earned net income of $200,000 this year. The company began the year with 10,000 shares of common stock and issued 5,000 more on April 1. They issued $7,500 in preferred dividends for the year. What is Brunleigh Corporations weighted average number of shares for the year?
Rebert Inc. showed the following balances for last year: Reberts net income for last year was 3,182,000. Refer to the information for Rebert Inc. above. Required: 1. Calculate the average common stockholders equity. 2. Calculate the return on stockholders equity.
Jupiter Corporation earned net income of $90,000 this year. The company began the year with 600 shares of common stock and issued 500 more on April 1. They issued $5,000 in preferred dividends for the year. What is Jupiter Corporations weighted average number of shares for the year?
WD Corporation reports the following year-end balance sheet data. The company's debt-to-equity ratio equals: Cash $ 42,000 Current liabilities $ 77,000 Accounts receivable 57,000 Long-term liabilities 28,000 Inventory 62,000 Common stock 102,000 Equipment 147,000 Retained earnings 101,000 Total assets $ 308,000 Total liabilities and equity $ 308,000
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $51,900; total assets, $219,400; common stock, $81,000; and retained earnings, $34,953.) CABOT CORPORATION Balance Sheet December 31 of current year Assets Liabilities and Equity Cash $ 12,000 Accounts payable $ 16,500 Short-term investments 9,000 Accrued wages payable 3,800 Accounts receivable, net 33,200 Income taxes payable 4,700 Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 71,400 Prepaid expenses 2,800 Common stock 81,000 Plant assets, net 151,300 Retained earnings 67,050 Total assets $ 244,450 Total liabilities and equity $ 244,450 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 455,600 Cost of goods sold 298,050 Gross profit 157,550 Operating expenses 99,500 Interest expense…
Selected current year-end financial statements of Cabot Corporation follow. (All sales were on credit; selected balance sheet amounts at December 31 of the prior year were inventory, $49,900; total assets, $179,400; common stock, $84,000; and retained earnings, $35,896.) CABOT CORPORATION Balance Sheet December 31 of current year Assets Liabilities and Equity Cash $ 20,000 Accounts payable $ 17,500 Short-term investments 8,200 Accrued wages payable 4,200 Accounts receivable, net 31,400 Income taxes payable 4,300 Merchandise inventory 36,150 Long-term note payable, secured by mortgage on plant assets 69,400 Prepaid expenses 2,850 Common stock 84,000 Plant assets, net 147,300 Retained earnings 66,500 Total assets $ 245,900 Total liabilities and equity $ 245,900 CABOT CORPORATION Income Statement For Current Year Ended December 31 Sales $ 450,600 Cost of goods sold 296,950 Gross profit 153,650 Operating expenses 98,600 Interest expense 3,800…