Net Sales $1,500,000 Cost of Goods Sold 934,000 Gross Profit $ 566,000 Operating
ID: 2559425 • Letter: N
Question
Net Sales
$1,500,000
Cost of Goods Sold
934,000
Gross Profit
$ 566,000
Operating Expense
376,000
Operating Income
$ 190,000
Other Expense: interest
15,000
Earnings Before Income Tax
$ 175,000
Income Taxes
66,000
Net Income
$ 109,000
Dividends Paid
48,000
Net Increase in Retained Earnings
$ 61,000
Assets
Cash
$ 30,000
Receivables (net)
130,000
Inventory
170,000
Land, Buildings, and Equipment (net)
650,000
Intangible Assets
20,000
$1,000,000
Liabilities and Stockholders' Equity
Trade Notes and Accounts Payable
$ 100,000
Miscellaneous Current Liabilities
50,000
5% Bonds Payable
300,000
Common Stock, $10 Par
100,000
Additional Paid-In Capital
51,000
Retained Earnings
399,000
$1,000,000
$81 Marketing price of stock at end of year.
Net Sales
$1,500,000
Cost of Goods Sold
934,000
Gross Profit
$ 566,000
Operating Expense
376,000
Operating Income
$ 190,000
Other Expense: interest
15,000
Earnings Before Income Tax
$ 175,000
Income Taxes
66,000
Net Income
$ 109,000
Dividends Paid
48,000
Net Increase in Retained Earnings
$ 61,000
Compute the following ratios: [In those cases where you have not been given the ratio definition, you should use the definition that we used in lass 1. net profit margin 2. |total asset turnover (use year-end assets) return on assets (use year-end assets) 3 Net Income Total Assets operating income margin 4. Operating Income Net Sales operating asset turnover (use year-end assets) Net Sales Operating Assets return on operating assets (use year-end assets) 6 Operating Income Operating Assets 7. return on total equity (use year-end total equity) 8. basic earnings per share 9. Earnings Before Interest & Tax 10. price/earnings ratio fixed charge coverage ratio Interest 11-1 dividend payout ratio dividend yield ratio Dividends per Common Share Market Price per Common Share 12.Explanation / Answer
1)Net Profit Margin Netprofit/Sales Net Income 109000$ Sales 1500000$ Net Profit Margin 0.07 7.27 2)Total assets Turnover Total assets 1000000$ Sales 1500000$ 1.5 3) Return on Assets Net Income 109000$ Total assets 1000000$ Netincome/Total assets 0.109 10.9 4)Operating Income margin Operating Income 190000$ Net sales 1500000$ Operating Income margin 12.7 5)Operating asset Turnover Operating Assets 330000 Sales 1500000 Operating asset Turnover 4.55 6)Return on operating asset Operating income 190000$ Operating Asset 330000 Return on operating asset 0.58 57.58 7)Return on Total Equity Dividend paid 48000 Total Equity 100000 Return on Total Equity 0.48 48 8)Earning per share Total Earnings available to Equity shareholders 61000 No of shares 10000 Earning per share 6.1 9)Fixed change coverage ratio Earning before interest & Tax 190000 Interest 15000 Fixed change coverage ratio 12.67 10)Price earning ratio PE Ratio=Marketprice/Earning per share Market price 81 EPS 6.1 PE Ratio 13.28 Times 11)dividend payout ratio Dividend paid 48000 Net income 109000 dividend payout ratio=Dividend paid/Net Income 0.44 44.04% 12)Dividend yield ratio Dividend 48000 No of shares 10000 Dividend per share 4.8 Market price per share 81 Dividend yield ratio(4.8/81)*100 5.93