TABLE 1: Balance Sheet of GPC Corporation as of December 31, 2016 and 2015 ASSET
ID: 2567154 • Letter: T
Question
TABLE 1: Balance Sheet of GPC Corporation as of December 31, 2016 and 2015
ASSETS
2015
2016
Current Assets
Cash and Marketable Securities
100
120
Receivables
50
60
Inventories
150
180
Total Current Assets
300
360
Property, Plant, and Equipment (PP&E)
400
490
Less: Accumulated depreciation
100
130
Net PP&E
300
360
Total Assets
600
720
LIABILITIES AND STOCKHOLDERS'S EQUITY
Current Liabilities
Accounts Payable
60
72
Short-term debt
90
184.6
Total Current Liabilities
150
256.6
Long-term debt (8% interest bonds maturing in 20x7)
150
150
Stockholders' equity (1 million shares outstanding)
300
313.4
Paid-in capital
200
200
Retained earnings
100
113.4
Total Liabilities and Equity
600
720
All figures are in millions of U.S. dollars
TABLE 2: Income Statement of GPC Corporation for 2016
Sales revenue
200
Cost of goods sold
-110
Gross margin
90
General, Selling, and Administrative expenses
-30
Operating Income
60
Interest expenses
-21
Taxable income
39
Income tax (40%)
-15.6
Net Income (= Net Profits or Earnings after tax)
23.4
Allocation of net income:
Dividends
10
Change in retained earnings
13.4
All figures are in millions of U.S. dollars.
alculate the following ratios for 2016, and briefly comment on GPC profitability:
Profit margin
Total assets turnover
Total assets-to-shareholder equity
TABLE 1: Balance Sheet of GPC Corporation as of December 31, 2016 and 2015
ASSETS
2015
2016
Current Assets
Cash and Marketable Securities
100
120
Receivables
50
60
Inventories
150
180
Total Current Assets
300
360
Property, Plant, and Equipment (PP&E)
400
490
Less: Accumulated depreciation
100
130
Net PP&E
300
360
Total Assets
600
720
LIABILITIES AND STOCKHOLDERS'S EQUITY
Current Liabilities
Accounts Payable
60
72
Short-term debt
90
184.6
Total Current Liabilities
150
256.6
Long-term debt (8% interest bonds maturing in 20x7)
150
150
Stockholders' equity (1 million shares outstanding)
300
313.4
Paid-in capital
200
200
Retained earnings
100
113.4
Total Liabilities and Equity
600
720
All figures are in millions of U.S. dollars
TABLE 2: Income Statement of GPC Corporation for 2016
Sales revenue
200
Cost of goods sold
-110
Gross margin
90
General, Selling, and Administrative expenses
-30
Operating Income
60
Interest expenses
-21
Taxable income
39
Income tax (40%)
-15.6
Net Income (= Net Profits or Earnings after tax)
23.4
Allocation of net income:
Dividends
10
Change in retained earnings
13.4
All figures are in millions of U.S. dollars.
Explanation / Answer
Profit Margin =Net Income / Net Sales Net Income = $ 23.40 /' By '/' Net Sales = $ 200.00 = 0.12 Profit Margin = 0.12 or 12% Profit margin of the company is 12% on total sales. This is the net income after all expenses so this is the good return Total Assets Turnover = Net Sales / Average total Assets Net Sales = $ 200.00 /' By '/' Average Total Assets $ 660.00 ($ 600 + $ 720) / 2 = 0.30 Total Assets Turnover = 0.30 or 30% This ratio will shows that 30% of the total assets are rolling in one year. Total Assets to Shareholder's Equity = Total Shareholder equity / Total Assets Total Shareholders Equity $ 300.00 '/' By '/' Total Assets $ 600.00 Total Assets to Shareholder's Equity = 0.50 Total Assets to Shareholder's Equity = 0.50 or 50% This ratio will shows what is the equity shareholders value against the total assets
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