The financial statements for Castile Products, Inc, are given below. Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash Accounts receivable, net Merchandise inventory Prepaid expenses Total current assets Property and equipment, Total assets Liabilities and Stockholders' Equity Liabilities: Current liabilities Bonds payable, 8% Total liabilities Stockholders' equity: Common stock, $10 par value Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 19,000 190,000 400,000 10,000 619,000 880,000 $1,499,000 230,000 370,000 600,000 170,000 729,000 899,000 $1,499,000 Castile Products, Inc. Income Statement For the Year Ended December 31 Sales $2,170,000 Cost of goods sold 1,190,000 Gross margin 980,000 Selling and administrative expenses 590,000 Net operating income 390,000 Interest expense 29,600 Net income before taxes 360,400 Income taxes (30%) 108,120 Net income $ 252, 280 Account balances at the beginning of the year were: accounts receivable, $200,000, and inventory. $280,000. All sales were on account. Assets at the beginning of the year totaled $1,090,000, and the stockholders' equity totaled $625.000. 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? Required: Compute the following: (For Requirements 1 to 4, enter your percentage answers rounded to 2 decimal 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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