Comparative balance sheets report average total assets for the year of $2,575,000 and average total equity of $1,917,000 (dollar amounts in thousands, except earnings per share).
SPINX, INC.
STATEMENT OF EARNINGS
FOR THE YEAR ENDED DECEMBER 31, CURRENT YEAR
Net sales ....................................... $4,395,253
Costs and expenses:
Cost of goods sold ......................... (2,821,455)
Operating expenses ......................... (1,004,396)
Interest revenue ............................. 15,797
Earnings before income tax .............. $ 585,199
Income tax expense ........................... (204,820)
Net earnings ................................... $ 380,379
Earnings per share ......................... $1.70
a. Prepare an income statement for the year in a multiple-step format.
b. Compute the (1) gross profit rate, (2) net income as a percentage of net sales, (3) return on assets, and (4) return on equity for the year. (Round computations to the nearest one-tenth of 1 percent.)
c. Explain why interest revenue is not included in the company's gross profit computation.