Free Solved The following selected information is for Marx Corporation.


Screenshot 2024 01 10 210947

Screenshot 2024 01 10 210947

Screenshot 2024 01 10 211004

Step 1 of 5

In the problem, the selected information for Marx Corporation is given that includes the total assets, total shareholder’s equity, sales, cost of goods sold and net income for the year 2019, 2020 and 2021.

The given information will be used to compute the gross profit margin, assets turnover, return on assets, and return on common shareholder’s equity for 2021, and 2020.

Explanation:

From the given financial data of corporation that includes the total assets, total shareholder’s equity, sales, cost of goods sold and net income for the year 2019, 2020 and 2021, the gross profit margin, assets turnover, return on assets, and return on common shareholder’s equity for 2021, and 2020 will be computed.

 

Step 2 of 5

Using the provided information, the requested financial ratios for Marx Corporation for the years 2021 and 2020 are computed as –

1) Gross profit margin= sales-cost of goods soldsales×100

For 2021 –

Gross profit margin= sales-cost of goods soldsales×100

Gross profit margin = 505,000−378,245505,000×100

Gross profit margin = 25.1 %

For 2020 –

Gross profit margin= sales-cost of goods soldsales×100

Gross profit margin = 390,000−281,190390,000×100

Gross profit margin = 27.9%

Explanation:

Gross profit margin is calculated by subtracting the given cost of goods sold from sales for both 2021, 2020 and the outcome value will be divided by sales amount.

 

 

 

Step 3 of 5

2) Assets turnover is computed as follows-

for 2021

Assert Turnover=salesAverage Total Assets

Assets Turnover = 505,000357,000+274,0002

AssetsTurnover=1.60

for 2020 :

Assert Turnover=salesAverage Total Assets

Assets turnover = 390,000274,000+283,0002

Assets turnover = 1.40

Explanation:

Assets turnover is computed by dividing the sales of the particular year by the average total assets and average total assets is computed by adding the assets value of particular year and its previous year and dividing the amount by 2 .

 

Step 4 of 5

3) Return on Assets :

For 2021 :

Return on assets =(Net income  average Total assets)×100

Return on assets =32,320357,000+274,0002

Return on Assets = 0.1024×100

ReturnonAssets=10.24%

For 2020:

Returnonassets=(Net income  average Total assets)×100

Return on Assets ​= 29,250274,000+283,0002

Return on Assets = 0.1050×100

Return on Assets = 10.50%

Explanation:

Return on assets is calculated by dividing the particular year’s net income by the average total assets. And average total assets is computed by adding the assets value of particular year and its previous year and dividing the amount by 2 .

 

Step 5 of 5

4) Return on common shareholder’s equity is computed as –

Return on common shareholders’ equity=  Net incomeaverage shareholders equity  ×100

For 2021:

Return on common shareholders’ equity = 32,320139,000+103,0002×100

Return on common shareholder’ equity=0.2671×100

Return on common shareholder’ equity=26.71%

For 2020 :

Return on common shareholders’ equity = Net incomeaverage shareholders equity×100

Return on common shareholder’ equity = 29,250103,000+50,5002×100

Return on common shareholder’ equity =0.381×100

Return on common shareholder’ equity = 38.1%

Explanation:

Return on common shareholder’s equity is calculated by dividing the particular year’s net income by the average shareholder’s equity . And average shareholder’s equity is computed by adding the shareholder’ equity of particular year and its previous year and dividing the amount by 2 .

 

Final solution

1) for 2021 :

Gross profit margin = 25.1%

Assets Turnover =1.60

Return on Assets =10.24%

Return on common shareholder’ equity=26.71%

2) for 2020 :

Gross profit margin =27.9%

Assets turnover = 1.40

Return on Assets = 10.50%

Return on common shareholder’ equity = 38.1%

 

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