Exercise 14-8 Selected comparative statement data for Queen Products Company are
ID: 2499074 • Letter: E
Question
Exercise 14-8
Selected comparative statement data for Queen Products Company are presented below. All balance sheet data are as of December 31.
2016 2017
Net sales $755,000 $715,000
Cost of goods sold $475,000 $435,000
Interest expense $6,000 $4,000
Net income $45,000 $37,000
Accounts receivable $115,000 $100,000
Inventory $80,000 $70,000
Total assets $575,000 $495,000
Total common stockholders’ equity $425,000 $320,000
Compute the following ratios for 2017. (Round answers to 1 decimal place, e.g. 1.6, or 1.6% .)
Profit margin ? %
Asset turnover ? times
Return on assets ? %
Return on common stockholders’ equity ? %
Explanation / Answer
Proft margin=Net income/Sales*100
=37000/715,000
=5.2%
Asset turnover Ratio=Total Revenue/Average total assets(opening assets+closing assets)/2
=715000/((575000+495000)/2)
=$715,000/$535,000
=1.34times
Return on assets=Net Income/Average total assets
=$37,000/$535,000*100
=6.92%
Return on common stockholder's equity=Net Income/Common Stockholders' equity*100
=$37,000/$320,000*100
=11.56%
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