Question

1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Answer 1

Answer:

A. 34.2%

B. 4.5%

C. 8.1%

D.10.64%

Explanation:

a) Calculation to determine Gross margin percentage

Using this formula

Gross margin percentage = Gross profit/Net Sales

Let plug in the formula

Gross margin percentage= 27000/79000

Gross margin percentage = 34.2%

b) Calculation to determine Net profit margin

Using this formula

Net profit margin = Net income/Net Sales

Let plug in the formula

Net profit margin = 3540/79000

Net profit margin = 4.5%

c) Calculation to determine Return on assets

Using this formula

Return on assets = (Net income+Interest expense)/Average total assets

Let plug in the formula

Return on assets = (3540+360)/48120

Return on assets= 8.1%

d) Calculation to determine Return on equity

Using this formula

Return on equity

= Net income/Average equity

Let plug in the formula

Return on equity = 3540/33270

Return on equity =10.64%