Financial statements for Revnik Company follow. a. Net margin b. Turnover of ass

ID: 2445916 • Letter: F

Question

Financial statements for Revnik Company follow.

a. Net margin

b. Turnover of assets. ( Use the total assets of 2014 as the average total assets to compute the 2014 figure).

c. Return on Investment. (Use the total assets of 2014 as the average total assets to compute the 2014 figure.)

d. Return on equity. ( Use the total stockholders' equity of 2014 as the average total stockholders' equity to compute the 2014 figure.)

e. Earnings per share.

f. Book value per share of common stock.

g. Price-earnings ratio ( market price per share: 2014, $12.20; 2015, $ 13.40)

h. Dividend yield on common stock.

(a) Computation of net margin.We have,

Net margin = Net income / Total Revenue

(b) Computation of turnover of assets.We have,

Turnover of Asset = Net Revenue / Average total asset

(c) Computation of return on investment.We have,

Return on investment = Net margin ratio x Turnover of assets

(d) Computation of return on equity.We have,

Step1: Computation of Equity multiplier.We have,

Total sharholder equity for 2014 = $ 287,600

Total sharholder equity for 2015 = (287,600 + 306,400) / 2 = $ 297,000

Equity multiplier = Assets / Equity

Step2: Computaion of return on equity.We have,

Return on Equity = Net profit margin x Equity multiplier x Asset turnover ratio

(e) Computation of earning per share.We have,

Earning per share = Earning after preferance dividend / Number of equity share

(f) Computation of ;book value per share.We have,

Book value per share = Net Worth / Number of equity share outstandings

(g) Computation of price-earning ratio.We have,

Price-earning ratio = Market price per share / Earning per share

(h) Computation of dividend yield on common stock.We have,

Dividend yield = Annual dividend per share / price per share

Particulars 2015 2014 Net margin 27,100 / 329,800 = 0.0822*100 = 8.22 % 40,900/306,800 = 0.1333*100 = 13.33%

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.