Selected comparative statement data for Queen Products Company are presented bel

Question

Selected comparative statement data for Queen Products Company are presented below. All balance sheet data are as of December 31.

2017

2016

Compute the following ratios for 2017. (Round answers to 1 decimal place, e.g. 1.6, or 1.6% .)

2017

2016

Net sales $762,500 $718,500 Cost of goods sold 478,500 439,000 Interest expense 6,200 4,000 Net income 50,000 40,500 Accounts receivable 121,500 110,000 Inventory 83,300 70,300 Total assets 576,200 503,700 Total common stockholders’ equity 429,500 329,000

Explanation / Answer

Profit Margin = Net Income /Net sales

Profit MArgin = 50000/762500 = 6.55%

Asset Turmover ratio = Net sales / Average Total Assets

Assets Turnover ratio = 762500/(576200+503700/2) = 762500/539950 = 1.41

Return on Assets = Net Income /Average total assets = 50000/539950 = 0.09

Return on Common shareholdrers equity = Net Income /Average Common shareholders equityx100

= 50000/(429500+329000/2) = 50000/379250 x100 = 13.18

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