Selected data from the Carmen Company at year\'s end are presented below: Total

Question

Selected data from the Carmen Company at year's end are presented below:

     Total Sales                                                                      $2,000,000

     Average total assets                                                           2,200,000

     Net income                                                                           250,000

     Net Sales                                                                           1,300,000

     Average common stockholders' equity                                   1,000,000

     Net Cash provided by operation activities                                  275,000

     Shares of common stock outstanding                                         10,000

what probability ratios can be drawn from this?

If you are to advise your client to invest in Carmen Company, what can you show him/her to demonstrate that the company is profitable or not profitable?

Explanation / Answer

= 250,000/1,300,000 = 19.23%

Return on assets = 250,000/2,200,000 = 11.36%

Return on equity =250,000/1,000,000= 25.00%

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