Refer to the information provided for Plasma Screens Corporation in E127. In E127, The balance sheets for

Refer to the information provided for Plasma Screens Corporation in E12–7.

In E12–7, The balance sheets for Plasma Screens Corporation and additional information are provided below.

Required:
1. Calculate the following profitability ratios for 2015:
a. Gross profit ratio.
b. Return on assets.
c. Profit margin.
d. Asset turnover.
e. Return on equity.
2. When we compare two companies, can one have a higher return on assets while the other has a higher return on equity? Explain your answer.

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PLASMA SCREENS CORPORATION Balance Sheets December 31, 2015 and 2014 2015 2014 Assets Current assets: Cash Accounts receivable Inventory Investments $ 242,000 98,000 105,000 5,000 130,000 102,000 90,000 3,000 Long-term assets: Land Equipment Less: Accumulated depreciation 580,000 890,000 580,000 770,000 (368,000) $1,307 000 Total assets $1.392,000 Liabilities and Stockholders' Equit Current liabilities: Accounts payable Interest payable $109,000 7,000 9,000 $ 95,000 13,000 6,000 Income tax payable Long-term liabilities: Notes payable Stockholders' equity: Common stock 110,000 220,000 800,000 357,000 $1,392,000 800,000 173,000 $1.307,000 Retained earnings Total liabilities and stockholders' equity