Use the following information about Sanibel Corporation to calculate the following ratios for 2011 (assume an effective tax rate of 35%):
a.Return on Assets
b.Profit margin for ROA
c.Assets Turnover
d.Return on Common Shareholders' Equity
e.Profit Margin for ROCE
f.Accounts Receivable Turnover
g.Inventory Turnover
h.Fixed Asset Turnover
Sanibel Corporation
Balance Sheet
As of December 31 ,Assets:Cash and cash equivalentsAccounts ReceivableInventoryCurrent Assets2011$712,300408,000510.0001,630,3002010$425,000106,250612.0001,143,250
EquipmentLess: Accumulated depreciationLandTotal assets714,000(238,000)425,000$2,531,300654,500(119,000)170,000$1,848,750
Liabilities Accounts Payable Accrued Salaries Payable Rent Expense Payable Income Tax Payable Current Liabilities$297,50093,50037,400117.300545,700$382,500136,00017,00068.000603,500
Long-term note payableTotal Liabilities Stockholders’ Equity: Common stock Retained earnings Total liabilities and stockholders’ equitySanibel CorporationIncome StatementFor the year ended December 31,2011RevenuesCost of goods sold Gross Profit Operating Expenses Depreciation expense Salary expense Insurance Expense Rent Expense Interest Expense Total Operating ExpensesIncome from Operations Income Tax ExpenseNet income850,0001,395,700714,000421.600$2,531,300$2,499,000(1,428,000)(112,000)(233,600)(40,000)(160,000)(67.200)510,0001,113,500510,000225,250$1,848,7501,071,000(612,800)458,200(160,370)$297.830
Definitions:
Total Revenue
The total amount of money generated by a business from the sale of goods or services before any expenses are subtracted.
Marginal Cost
The change in total cost that arises when the quantity produced is incremented by one unit; essentially, it is the cost of producing one more unit of a good.
Output
The quantity of goods or services produced by a firm or economy.
Total Revenue Curve
A graphical representation that shows how total revenue changes as the quantity sold of a good or service changes, holding all other factors constant.