Calculate the return on equity (after tax) ratio. (Do NOT enter your answer as a percentage (i.e., do not move the decimal two places to the right). Enter it as a proportion rounded to the nearest hundredth.)
Calculate the return on equity (after tax) ratio. (Do NOT enter your answer as a percentage (i.e., do not move the decimal two places to the right). Enter it as a proportion rounded to the nearest hundredth.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
| LOGIC COMPANY Comparative Income Statement For Years Ended December 31, 2019 and 2020 |
||||
| 2020 | 2019 | |||
| Gross sales | $ | 19,000 | $ | 15,000 |
| Sales returns and allowances | 1,000 | 100 | ||
| Net sales | $ | 18,000 | $ | 14,900 |
| Cost of merchandise (goods) sold | 12,000 | 9,000 | ||
| Gross profit | $ | 6,000 | $ | 5,900 |
| Operating expenses: | ||||
| $ | 700 | $ | 600 | |
| Selling and administrative | 2,200 | 2,000 | ||
| Research | 550 | 500 | ||
| Miscellaneous | 360 | 300 | ||
| Total operating expenses | $ | 3,810 | $ | 3,400 |
| Income before interest and taxes | $ | 2,190 | $ | 2,500 |
| Interest expense | 560 | 500 | ||
| Income before taxes | $ | 1,630 | $ | 2,000 |
| Provision for taxes | 640 | 800 | ||
| Net income | $ | 990 | $ | 1,200 |
| LOGIC COMPANY Comparative Balance Sheet December 31, 2019 and 2020 |
||||
| 2020 | 2019 | |||
| Assets | ||||
| Current assets: | ||||
| Cash | $ | 12,000 | $ | 9,000 |
| Accounts receivable | 16,500 | 12,500 | ||
| Merchandise inventory | 8,500 | 14,000 | ||
| Prepaid expenses | 24,000 | 10,000 | ||
| Total current assets | $ | 61,000 | $ | 45,500 |
| Plant and equipment: | ||||
| Building (net) | $ | 14,500 | $ | 11,000 |
| Land | 13,500 | 9,000 | ||
| Total plant and equipment | $ | 28,000 | $ | 20,000 |
| Total assets | $ | 89,000 | $ | 65,500 |
| Liabilities | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 13,000 | $ | 7,000 |
| Salaries payable | 7,000 | 5,000 | ||
| Total current liabilities | $ | 20,000 | $ | 12,000 |
| Long-term liabilities: | ||||
| Mortgage note payable | 22,000 | 20,500 | ||
| Total liabilities | $ | 42,000 | $ | 32,500 |
| Common stock | $ | 21,000 | $ | 21,000 |
| 26,000 | 12,000 | |||
| Total stockholders’ equity | $ | 47,000 | $ | 33,000 |
| Total liabilities and stockholders’ equity | $ | 89,000 | $ | 65,500 |
Calculate the
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