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 $765,000 $717,500 Cost of goods sold 479,000 439,000 Interest expense 6,100 4,000 Net income 52,500 41,500 Accounts receivable 120,500 107,500 Inventory 89,900 73,900 Total assets 581,600 504,900 Total common stockholders’ equity 430,400 327,200

Explanation / Answer

Profit margin = 6.8%

Profit margin = (Net Income / Net Sales) x 100

= ($52,500 / $7,65,000) x 100

= 6.8%

Asset turnover = 1.4 Times

= Net Sales / Average Total Assets

= $7,65,000 / [ ($5,81,600 + $5,04,900) / 2 ]

= $7,65,000 / $5,43,250

= 1.4 Times

Return on assets = 9.7%

= (Net Income / Average Total Assets ) x 100

= ($52,500 / $5,43,250) x 100

= 9.7%

Return on common stockholders’ equity = 12.2%

= (Net Income / Average common stockholders’ equity) x 100

= ($52,500 / [ ($4,30,400 + 327200)/2 ] x 100

= 13.86%     

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