Suppose selected comparative statement data for the giant bookseller Barnes & No

Question

Suppose selected comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions).

2017

2016

Compute the following ratios for 2017. (Round asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%)

2017

2016

Net sales $4,750 $4,900 Cost of goods sold 3,000 3,100 Net income 55 100 Accounts receivable 65 100 Inventory 1,150 1,250 Total assets 2,850 3,150 Total common stockholders’ equity 880 1,050

Explanation / Answer

Answer:-a)-Profit margin =(Net income/Net sales)*100

=($55/$4750)*100 =1.16%

b)-Asset turnover= Net sales/Average total assets

=$4750/($3150+$2850)/2

=$4750/$3000 =1.58 times

c)-Return on assets =Net income/Average total assets

                    ={$55/($3150+$2850)/2}*100 =1.83%

d)-Return on common stockholder’s equity=Net income-Preferred dividends/Average common stockholder’s equity

={$55/($1050+$880)/2}

=5.70%

e)-Gross profit rate ={(Net Sales-Cost of goods sold)/Net sales}*100

={($4750-$3000)/$4750}*100

=36.84%

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