Flingers Inc. reveals the following information in their annual report for FY 2014
Earnings and Expenses
Sales $10,000,000
Cost of goods sold $5,000,000
Pretax earnings $500,000
Selected Balance Sheet Items
Merchandise inventory $80,000
Total assets $2,000,000
Calculate Flingers' profit margin, return on assets, and leverage effect
What will be an ideal response?
Answer:
Profit margin = = = 5%
Return on assets = = = 25%
Leverage effect = = = $20
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