The financial statements for Jacqueline’s Rodeo Wear are given below:

JACQUELINE’S RODEO WEAR

Comparative Balance Sheet
31-Dec-03

Assets                                                                                               2003                            2002      
Current assets
      Cash and short-term investments....................................       $    5,040                 $    4,920
      Accounts receivable (net) ...............................................           30,240                     28,960
      Inventory .........................................................................           60,480                     54,800
      Total current assets.........................................................           95,760                     88,680
Plant assets (net) ..................................................................         156,240                   148,200
      Total assets .....................................................................       $252,000                 $236,880

Liabilities and stockholders' equity

Current liabilities ...................................................................       $  42,000                  $ 38,600
Long-term liabilities ...............................................................           67,200                     72,000
Common stock ......................................................................           25,000                     25,000
Retained earnings .................................................................         117,800                   101,280
        Total liabilities and stockholders' equity.........................       $252,000                 $236,880

JACQUELINE’S RODEO WEAR

Income Statement
For the Year Ended December 31, 2003
     
Net sales ..........................................................................................................            $360,000
Cost of goods sold ...........................................................................................              252,000
Gross profit ......................................................................................................              108,000
Operating expenses (including $7,200 interest and $9,000 income taxes)...     68,400
Net income .......................................................................................................            $  39,600

Net cash provided by operating activities totaled $46,800.

Instructions
Compute the following ratios at December 31, 2003:
1. Return on assets
2. Profit margin
3. Asset turnover
4. Gross profit rate
5. Operating expenses to sales
6. Cash return on sales
Answers:
1. Return on Assets 16.20%
Net Income 39,600.00
Average Total Assets 244,440.00
ROA 16.20

2. Profit Margin 11%

Net Income 39,600.00
Net Sales 360,000.00
Profit Margin 11

3. Asset Turnover 1.47%

Net Sales 360,000.00
Average Total Assets 244,440.00
Asset Turnover 1.47

4. Gross Profit Rate 30%

Gross Profit 108,000.00
Net Sales 360,000.00
Gross Profit Rate 30

5. Operating expenses to sales 19%

Operating expenses 68,400.00
Net Sales 360,000.00
Operating expenses to sales 19

6. Cash return on sales 13%

Operating profit 46,800.00
Net Sales 360,000.00
Cash return on sales 13