ASSIGNMENT RESOURCES Ch13 Assignme nt Exercise 13-10 Suppose selected comparativ

Question

ASSIGNMENT RESOURCES Ch13 Assignme nt Exercise 13-10 Suppose selected comparative statement data for the giant bookseller Barnes& Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions). 2017 2016 $4,950 $4,900 3,300 3,701 65 181 109 1,250 1,350 2,850 3,250 Net sales Exercise 13-5 Exerise 13-10 Cost of goods sold Review Score by Study Net income Accounts receivable Inventory Total assets Total common stockholders' equity Objective 920 1,060 Compute the following ratios for 2017. (Round asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%) (a) Profit margin (b) Asset turnover (c) Return on assets (d) Return on common stockholders' equity (e) Gross profit rate times

Explanation / Answer

a)

Profit margin

= Net Income / Net Sales

= $65 / $4,950

= 0.013 or 1.3%

b)

Average total assets

= ( Opening assets + Closing assets) / 2

= ($3,250 + $2,850) / 2

= $ 3,050

So, assets turnover

= Net Sales / Average total assets

= $4,950 / $ 3,050

= 1.62 times

c)

Return on assets

= Net Income / Total assets

= $65 / $2,850

= 0.023 or 2.3%

d)

Return on equity

= Net Income / Total equity

= $65 / $920

= 0.071 or 7.1%

e)

Gross profit

= Net Sales – Cost of goods sold

= $4,950 - $3,300

= $1,650

So, Gross profit rate

= Gross profit / Net Sales

= $1,650 / $4,950

= 0.333 or 33.3%

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---