3 Thornton Company\'s income statement information follows 2817 Net sales Income

Question

3 Thornton Company's income statement information follows 2817 Net sales Income before interest and taxes Net income after taxes Interest expense Stockholders equity, December 31 (2816: $280,880) Common stock, December 31 $425,803 $264,800 77,800 62,500 7,703 306,003 232,800 281,0331,880 3.5 points 112,003 55,803 8,600 Print The average number of shares outstanding was 7,800 for 2018 and 6,920 for 2017 RoferancesRequired Compute the following ratios for Thornton for 2018 and 2017 a. Number of times interest was earned. (Round your answers to 2 decimal places.) b. Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.) c. Price-earnings ratio (market prices: 2018, $66 per share: 2017, $77 per share). (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. Return on average equity (Round your answers to 2 decimal places. (i.e, 2345 should be entered as 23.45).) e. Net margin (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).) a. Interest earned times times b. Earnings per share tmes times d. Retun on equity e. Net margin

Explanation / Answer

2018 2017 1) Times interest earned = EBIT/ Interest = $112,000/$8600 ; $77,000/$7700 13.02 10 Tmes 2) EPS = Net Income / Outstanding Shares = $55800/7800 ; $62,500/$6920 $7.15 $9.03 3) Price/Earning Ratio = Market price/EPS = $66/$7.15 ; $77/$9.03 9.23 8.53 Times 4) Return on common equity = Net profit/ Total shareholder's equity =$55800/306000 ; $62500/$232,000 18.24% 26.94% 5) Net Profit margin = $55800/$425000 ; $62,500/264000 13.13% 23.67%

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