1.Calculate the Profit Margin, Return on Assets, and the Return on Equity. Discuss how you calculated these values.

2.Identify and discuss areas of strengths and weakness (where applicable) revealed in Garners’ financial statements.
 

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GARNERS' PLATOON MENTAL HEALTH CARE, INC. Balance Sheet as of December 31, 2018 (in millions of dollars) Assots Current assets Cash and marketable securities Accounts receivable Inventory Total Fixed assets Gross plant and equipment Less: Depreciation Net plant and equipment Other long-term assets Total Total assets Not sales Less: Cost of goods sold $ 421 1,109 1,760 $ 3,290 $5,812 840 Earnings before taxes (EBT) Less: Taxes Net income $ 4,972 Liabilities and Equity Current liabilities GARNERS' PLATOON MENTAL HEALTH CARE, INC. Income Statement for Year Ending December 31, 2018 (in millions of dollars) Accrued wages and taxes Accounts payable Notes payable Total Long-term debt Stockholders' equity Preferred stock (30 million shares) Common stock and paid-in surplus (200 million shares) Retained earnings Total 892 $5,864 $9,154 Total liabilities and equity Gross profits Less: Other operating expenses Earnings before interest, taxes, depreciation, and amortization (EBITDA) Less: Depreciation Earnings before interest and taxes (EBIT) Less: Interest Less: Preferred stock dividends Not income available to common stockholders Less: Common stock dividends Addition to retained earnings $ 316 867 872 $ 2,055 $ 3,090 $ 60 $ 637 3,312 $ 4,009 $9,154 $ 4,980 2,246 $ 2,734 125 $ 2,609 200 $ 2,409 315 $ 2,094 764 $ 1.327 $ 60 $ 1.297 395 872 (continued) GARNERS' PLATOON MENTAL HEALTH CARE, INC. Balance Sheet as of December 31, 2018 (in millions of dollars) Assots Current assets Cash and marketable securities Accounts receivable Inventory Total Fixed assets Gross plant and equipment Less: Depreciation Net plant and equipment Other long-term assets Total Total assets Not sales Less: Cost of goods sold $ 421 1,109 1,760 $ 3,290 $5,812 840 Earnings before taxes (EBT) Less: Taxes Net income $ 4,972 Liabilities and Equity Current liabilities GARNERS' PLATOON MENTAL HEALTH CARE, INC. Income Statement for Year Ending December 31, 2018 (in millions of dollars) Accrued wages and taxes Accounts payable Notes payable Total Long-term debt Stockholders' equity Preferred stock (30 million shares) Common stock and paid-in surplus (200 million shares) Retained earnings Total 892 $5,864 $9,154 Total liabilities and equity Gross profits Less: Other operating expenses Earnings before interest, taxes, depreciation, and amortization (EBITDA) Less: Depreciation Earnings before interest and taxes (EBIT) Less: Interest Less: Preferred stock dividends Not income available to common stockholders Less: Common stock dividends Addition to retained earnings $ 316 867 872 $ 2,055 $ 3,090 $ 60 $ 637 3,312 $ 4,009 $9,154 $ 4,980 2,246 $ 2,734 125 $ 2,609 200 $ 2,409 315 $ 2,094 764 $ 1.327 $ 60 $ 1.297 395 872 (continued)

Answer rating: 100% (QA)

1 Calculate the profit margin return on assets and return on equity as follows Given Net Income1327m... View the full answer