Required Calculate the following ratios for 2018. (Consider 365 days a year. Do

Question

Required Calculate the following ratios for 2018. (Consider 365 days a year. Do not round intermediate calculations and round your final answers to 2 decimal places.) Answer is complete but not entirely correct. Inventory turnover ratio Average days in inventory Receivables turnover ratio Average collection period Asset turnover ratio Profit margin on sales Return on assets Return on shareholders' equity 9.09 40.13days 18.16 20.09 days 2.42 3.10% 7.52% 37.29 x % 261times 19.58 % 3 4 5 7 9. Equity multiplier 10. Return on shareholders' equity (using the DuPont framework)

Explanation / Answer

Answer 8.

Beginning Stockholder’s Equity = Beginning Paid-in Capital + Beginning Retained Earnings
Beginning Stockholder’s Equity = $590 + $740
Beginning Stockholder’s Equity = $1,330

Ending Stockholder’s Equity = Ending Paid-in Capital + Ending Retained Earnings
Ending Stockholder’s Equity = $590 + $890
Ending Stockholder’s Equity = $1,480

Average Stockholder’s Equity = (Beginning Stockholder’s Equity + Ending Stockholder’s Equity) / 2
Average Stockholder’s Equity = ($1,330 + $1,480) / 2
Average Stockholder’s Equity = $1,405

Return on Shareholders’ Equity = Net Income / Average Stockholder’s Equity
Return on Shareholders’ Equity = $276 / $1,405
Return on Shareholders’ Equity = $19.64%

Answer 10.

Return on Shareholders’ Equity = Return on Assets * Equity Multiplier
Return on Shareholders’ Equity = 7.52% * 2.61
Return on Shareholders’ Equity = 19.63%

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