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Selected Financial Statement Data for Homer Company Are Presented Below

Question 187

Essay

Selected financial statement data for Homer Company are presented below.  Net sales $1,500,000 Cost of goods sold 700,000 Interest expense 10,000 Net income 205,000 Total assets (ending) $900,000 Total common stockholders’ equity (ending) $600,000\begin{array}{lr}\text { Net sales } & \$ 1,500,000 \\\text { Cost of goods sold } & 700,000 \\\text { Interest expense } & 10,000 \\\text { Net income } & 205,000 \\\text { Total assets (ending) } & \$ 900,000 \\\text { Total common stockholders' equity (ending) } & \$ 600,000\end{array} Total assets at the beginning of the year were $800000; total common stockholders' equity was $500000 at the beginning of the period.
Instructions
Compute each of the following:
(a) Asset turnover
(b) Profit margin
(c) Return on assets
(d) Return on common stockholders' equity

Correct Answer:

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(a) Asset turnover = 1.76 [$1500000 / ($...

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