Given Crockett Corporation's balance sheet, why is the return on total assets 31.4%? AssetsCurrentCashAccounts receivableMerchandise inventoryNon-currentPlant assets, netTotal assetsCrockett CorporationBalance SheetAt December 31, 2019$ 206090170110$280SalesCost of salesGross profitLiabilitiesCurrentNet incomeAccounts payableWages payableNon-currentOther expensesBorrowings (8%)Total liabilitiesStockholders' EquityCommon stockRetained earningsTotal liabilities andCrockett CorporationIncome StatementFor the Year Ended December 31, 2019$300stockholders' equity****18012080$ 40The following additional information is available:a. The income tax rate is 50%; income taxes expense is included in other$ 3010c. Beginning balances of balance sheet accounts were the same as endingbalances as applicable.c. All sales are on credit.4010014010040140$280expenses.b. Interest expense is included in other expenses. Borrowings were outstandingfor the entire year.

Financial ratios are based on the relationship between two financial line items. Here the financial…

Answered: Given Crockett Corporation's balance…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Given Crockett Corporation's balance sheet, why is the return on total assets 31.4%?

Assets
Current
Cash
Accounts receivable
Merchandise inventory
Non-current
Plant assets, net
Total assets
Crockett Corporation
Balance Sheet
At December 31, 2019
$ 20
60
90
170
110
$280
Sales
Cost of sales
Gross profit
Liabilities
Current
Net income
Accounts payable
Wages payable
Non-current
Other expenses
Borrowings (8%)
Total liabilities
Stockholders' Equity
Common stock
Retained earnings
Total liabilities and
Crockett Corporation
Income Statement
For the Year Ended December 31, 2019
$300
stockholders' equity
****
180
120
80
$ 40
The following additional information is available:
a. The income tax rate is 50%; income taxes expense is included in other
$ 30
10
c. Beginning balances of balance sheet accounts were the same as ending
balances as applicable.
c. All sales are on credit.
40
100
140
100
40
140
$280
expenses.
b. Interest expense is included in other expenses. Borrowings were outstanding
for the entire year.

Definition Definition Financial statement that provides a snapshot of an organization's financial position at a specific point in time. It summarizes a company's assets, liabilities, and shareholder's equity, detailing what the company owns, what it owes, and what is left over for its owners. The balance sheet serves as a crucial tool to assess the financial health and stability of a company, as well as to help management make informed decisions about its future investments and financial obligations.

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