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 $763,500 $719,000 Cost of goods sold 476,500 437,500 Interest expense 7,400 4,100 Net income 47,500 44,000 Accounts receivable 116,000 100,500 Inventory 82,400 76,000 Total assets 579,200 498,000 Total common stockholders’ equity 429,200 322,100

Explanation / Answer

Profit margin = Net income*100/Net sales = 47500*100/763500 = 6.2%

Assets turnover = Sales/Average assets

Average assets = (579200+498000/2) = 538600

Assets turnover = 763500/538600 = 1.4 times

Return on assets = Net income*100/average assets = 47500*100/538600 = 8.8%

Return on Common Stockholder's equity = Net income*100/average equity

Average equity = (429200+322100/2) = 375650

Return on Common Stockholder's equity = 47500*100/375650 = 12.6%

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