Sokov Company’s income statement information follows. Number of times interest w
ID: 2495186 • Letter: S
Question
Sokov Company’s income statement information follows.
Number of times interest was earned. (Round your answers to 2 decimal places.)
Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.)
Price-earnings ratio (market prices: 2014, $64 per share; 2013, $73 per share). (Do not round intermediate calculations and round final answers to 2 decimal places.)
Return on average equity. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
Net margin. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45.))
2014 2013 Net sales $ 426,000 $ 253,000 Income before interest and taxes 115,000 77,000 Net income after taxes 55,720 62,400 Interest expense 8,950 7,450 Stockholders’ equity, December 31 (2012:$190,000) 303,000 245,000 Common stock, December 31 203,000 226,000
Explanation / Answer
a)Number of times interest was earned = Income before interest and taxes/Interest expense
For 2014 = 115,000/8950
= 12.85 times
..
For 2013 = 77,000/7,450
= 10.34 times
..
.
.
b)Earnings Per Share based on the average number of shares outstanding = Net Income After Taxes/Average number of shares outstanding
For 2014 = 55,720/7,840
= $7.11 per share
..
For 2013 = 62,400/6,870
= $9.08 per share
..
..
..
c)Price Earnings Ratio = Marker Price Per Share/EPS
For 2014 = 64/7.11
= 9 times
..
For 2013 = 73/9.08
= 8.04 times
..
..
..
d)Return on Equity = Net Income/Stockholders Equity
For 2014 = 55,720/303,000 * 100
= 18.39%
..
For 2013 = 62,400/245,000 * 100
= 25.47%
..
..
..
e)Net Margin = Net Income/Net Sales * 100
For 2014 = 55,720/426,000 * 100
= 13.08%
..
For 2013 = 62,400/253,000 * 100
= 24.66%
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