Required: Calculate the profitability ratios that can be computed from the above

Question

Required:

Calculate the profitability ratios that can be computed from the above information. Assume the company had no preferred stock or interest expense. Round percentage values to one decimal place and dollar value to zero decimal place.

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

Required:

Calculate the profitability ratios that can be computed from the above information. Assume the company had no preferred stock or interest expense. Round percentage values to one decimal place and dollar value to zero decimal place.

1.  Ratio of net sales to assets % 2.  Rate earned on total assets % 3.  Rate earned on common stockholders' equity % 4.  Earnings per share on common stock $ per share
Selected data from the Carmen Company at year end are presented below:

Explanation / Answer

1) Total Assets/Net Sales = 2,000,000/1,300,000 = 153.9%

2) Net Income/Average Total Assets = 250,000/2,200,000 = 11.4%

3) Net Income/Average Total C/S = 250,000/1,000,000 = 25.0%

4) Earnings per share on C/S = 250,000/10,000 = $25.00/share

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