In 2015, Pennington Corporation had net sales of $596,900 and cost of goods sold

Question

In 2015, Pennington Corporation had net sales of $596,900 and cost of goods sold of $357,900. Operating expenses were $151,200, and interest expense was $6,000. The corporation’s tax rate is 31%. The corporation declared preferred dividends of $13,100 in 2015, and its average common stockholders’ equity during the year was $194,700. Prepare an income statement for Pennington Corporation. PENNINGTON CORPORATION Income Statement For the Year Ended December 31, 2015 $ $ LINK TO TEXT Compute Pennington Corporation’s return on common stockholders’ equity for 2015. (Round answer to 1 decimal place, e.g. 10.5%.) Return on common stockholders’ equity %

Explanation / Answer

Return on common stockholders equity = Net income available to common stockholders / average stockholders equity

= 43342 / 194700

= 22.3%

Pennington Corporation Income Statement for the Year Ended December 31 Net sales $5,96,900 COGS $3,57,900 Gross profit $2,39,000 Operating expenses $1,51,200 EBIT $87,800 Interest $6,000 EBT $81,800 Taxes (31%) $25,358 Net income $56,442 Preference dividend $13,100 Net income available to common stockholders $43,342

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