do these rates of return look high or low 551018
Computing return on assets and return on equity
Godhi’s 2012 financial statements reported the following items—with 2011 figures given for comparison:
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|
GODHI Balance Sheet |
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|
2012 |
2011 |
|
|
Total assets |
$ 33,538 |
$ 29,562 |
|
Total liabilities |
17,100 |
14,962 |
|
Total stockholders’ equity (all common) |
16,438 |
14,600 |
|
Total liabilities and equity |
$ 33,538 |
$ 29,562 |
|
GODHI Income Statement |
||
|
Net sales |
$ 21,960 |
|
|
Cost of goods sold |
7,900 |
|
|
Gross profit |
$ 14,060 |
|
|
Selling, administrative, and general expenses |
8,600 |
|
|
Interest expense |
210 |
|
|
All other expenses |
1,360 |
|
|
Net income |
$ 3,890 |
|
Requirement
1.Compute Godhi’s rate of return on total assets and rate of return on common stockholders’ equity for 2012. Do these rates of return look high or low?
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