BusinessCourse E Menu Ratios Analyzing Firm Profitability The following informat

Question

BusinessCourse E Menu Ratios Analyzing Firm Profitability The following information is available for Crest Company: 2015 Annual Data Sales revenue$6,600,000 $6,000,000 Cost of goods sold 4,006,400 3,800,000 Net income 2016 310,000 264,000 Year-End Data Dec. 31, 2016 Dec. 31, 2015 2,850,000 $2,500,000 Total assets Common stockholders' equity 1,900,000 1,800,000 Calculate the following ratios for 2016: Round answers to one decimal place, unless otherwise noted. a. Gross profit percentage 39.3 % b. Return on sales 4.7 c. Asset turnover (Round answer to two decimal places.) 2.47 d. Return on assets

Explanation / Answer

Return on common stockholder's equity = (Net income-preferred dividend)*100/Average common stock holder's equity

= (310000-25000)*100/1850000

Return on common stockholder's equity = 15.4%

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