Martha's Enterprises spent $2,400 to purchase equipment three years ago. This equipment is currently valued at $1,800 on today's balance sheet but could actually be sold for $2,000. Net working capital is $200 and long-term debt is $800. Assuming the equipment is the firm's only fixed asset, what is the book value of shareholders' equity? The following amounts were reported by the two companies: Raiden Inc. Nash Company Net Income $42,000 $55,000 Total Assets $75,000 $94,000 Total Liabilities $40,000 $60,000 Total Revenues $120,000 $137,500 Required: 1.Calculate each company's net profit margin expressed as a percent. 2.Which company has generated a greater return of profit from each revenue dollar? State the basis for your answer.
Martha's Enterprises spent $2,400 to purchase equipment three years ago. This equipment is currently valued at $1,800 on today's balance sheet but could actually be sold for $2,000. Net working capital is $200 and long-term debt is $800. Assuming the equipment is the firm's only fixed asset, what is the book value of shareholders' equity? The following amounts were reported by the two companies: Raiden Inc. Nash Company Net Income $42,000 $55,000 Total Assets $75,000 $94,000 Total Liabilities $40,000 $60,000 Total Revenues $120,000 $137,500 Required: 1.Calculate each company's net profit margin expressed as a percent. 2.Which company has generated a greater return of profit from each revenue dollar? State the basis for your answer.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Martha's Enterprises spent $2,400 to purchase
equipment three years ago. This equipment is currently
valued at $1,800 on today's balance sheet but could
actually be sold for $2,000. Net working capital is $200
and long-term debt is $800. Assuming the equipment is
the firm's only fixed asset, what is the book value of
shareholders' equity?
The following amounts were reported by the
two companies:
Raiden Inc. Nash Company
Net Income
$42,000
$55,000
Total Assets
$75,000
$94,000
Total Liabilities $40,000
$60,000
Total Revenues $120,000
$137,500
Required:
1.Calculate each company's net profit margin
expressed as a percent.
2.Which company has generated a greater
return of profit from each revenue dollar?
State the basis for your answer.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education