Markus Company’s common stock sold for $2.25 per share at the end of this year.
ID: 2483209 • Letter: M
Question
Markus Company’s common stock sold for $2.25 per share at the end of this year. The company paid a common stock dividend of $0.45 per share this year. It also provided the following data excerpts from this year’s financial statements:
1.
What is the return on total assets (assuming a 30% tax rate)? (Round percentage answer to 1 decimal place. i.e., 0.123 should be considered as 12.3%)
2. What is the return on equity?
3. What is the accounts receivable turnover and the average collection period?
4. What is the inventory turnover and the average sale period?
5. What is the company’s operating cycle?
6. What is the equity multiplier?
Markus Company’s common stock sold for $2.25 per share at the end of this year. The company paid a common stock dividend of $0.45 per share this year. It also provided the following data excerpts from this year’s financial statements:
Explanation / Answer
cl op average Cash 29000 44800 36900 Accounts receivable 50000 43800 46900 Inventory 48100 50000 49050 Current assets 127100 138600 132850 Total assets 375000 360000 367500 Current liabilities 51,000 36,000 Total liabilities 100,000 90,000 ROA (97200/367500) 26.45% Common stock, $1 par value 108,000 108,000 ROE (97200/272500) 35.67% Total stockholders’ equity 275000 270000 272500 AR turnover (550000/46900) 11.73 Total liabilities and stockholders’ equity 375,000 360,000 average collection period 365/11.73 31.12 inventory turnover (319000/49050) 6.50 average sale period (365/6.5) 56.15 operating cycle (31.12+65.15) 96.27 Sales (all on account) 550,000 eq multiplier (total asset/equity) 1.35 Cost of goods sold 319,000 Gross margin 231,000 Net operating income 93,500 Interest expense 5,500 Net income 97,200