The balance sheets for a company and additional information are provided below. A COMPANY Balance Sheets December 31, 2024 and 2023 2024 2023 Assets Current assets: Cash $160,000 $116,000 Accounts receivable 70,000 88,000 Inventory 91,000 76,000 Investments 3,600 1,600 Long-term assets: Land 440,000 440,000 Equipment 750,000 630,000 Less:
The balance sheets for a company and additional information are provided below. A COMPANY Balance Sheets December 31, 2024 and 2023 2024 2023 Assets Current assets: Cash $160,000 $116,000 Accounts receivable 70,000 88,000 Inventory 91,000 76,000 Investments 3,600 1,600 Long-term assets: Land 440,000 440,000 Equipment 750,000 630,000 Less:
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.1C: Leverage Cook Corporation issued financial statements at December 31, 2019, that include the...
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The
A COMPANY | ||
Balance Sheets | ||
December 31, 2024 and 2023 | ||
2024 | 2023 | |
---|---|---|
Assets | ||
Current assets: | ||
Cash | $160,000 | $116,000 |
70,000 | 88,000 | |
Inventory | 91,000 | 76,000 |
Investments | 3,600 | 1,600 |
Long-term assets: | ||
Land | 440,000 | 440,000 |
Equipment | 750,000 | 630,000 |
Less: Accumulated |
(388,000) | (228,000) |
Total assets | $1,126,600 | $1,123,600 |
Liabilities and |
||
Current liabilities: | ||
Accounts payable | $95,200 | $81,000 |
Interest payable | 5,500 | 11,600 |
Income tax payable | 7,500 | 4,600 |
Long-term liabilities: | ||
Notes payable | 120,000 | 240,000 |
Stockholders' equity: | ||
Common stock | 660,000 | 660,000 |
238,400 | 126,400 | |
Total liabilities and stockholders' equity | $1,126,600 | $1,123,600 |
Additional information for 2024:
- Net income is $112,000.
- Sales on account are $1,382,500. (All sales are credit sales.)
- Cost of goods sold is $1,077,150.
Required:
1. Calculate the following profitability ratios for 2024:
2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity?
1a. Gross profit ratio (%)
1b. Return on assets (%)
1c. Profit margin (%)
1d. Asset turnover (times)
1e. Return on equity (%)
2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? Yes or No?
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