People Window Help Chrome File Edit View History BChapter 12 1192 X D Chapter 12

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People Window Help Chrome File Edit View History BChapter 12 1192 X D Chapter 12 Homework Oezto.mheducation,com/hm.tpx Amazon.com: Met... Bookmarksphislcal thoraplatBoaded Chain D blak diamonds 12 dian C Apps Exercise 12-8 Calculate profitablity ratios (LO12-4) below The balance sheets for Plasma Screens Corporation and additional information are provided Balance Sheets December 31, 2018 and 2017 Current assets: 116,800 120,000 2,000 80,000 2,000 78.000 95,000 4,000 Investments Long-term assets: 480,000 790,000 (428,000) 480,000 670,000 (268,000) Total assets 1,135,800 1,176,000 Liabilities and Stockhoiders' Equity Current lablities 85,000 12,000 5,000 $ 99,000 Accounts payable Interest payable 6,000 8,000 Income tax payable Notes payable Common stock 100.000200,000 Stockholders equity 700,000 74,000 Retained earnings 222,800 Total labiies and stockholders' equity 5 S 1,135,800 $ 1,176,000 002 Additional information for 2018 1. Net income is $48,800 2. Sales on account are $1,521,500 3. Cost of goods sold is $1,163,750 . Caloulate the following profitability ratios for 2018: (Round your answers to 1 decimal place.) a. Gross proft ratio b. Retum on assets e. Retun on equity NOV 1 30

Explanation / Answer

Answer to part A Gross profit ratio = Gross Profit/Sales 357750/1521500 23.5% W.Note Gross Profit = Sales - Cost of goodssold 1521500-1163750 357750 Answer to part B Return on asset = Net Income/Average Total Assets 48800/1155900 82.1% W.Note Average Total Assets = (Beginning Total assets+ Ending Total assets)/2 (1176000+1135800)/2 1155900 Answer to part C Profit Margin Ratio = Net Income/Sales 48800/1521500 3.21% Answer to part D Asset Turnover Ratio = Sales/Average Total Assets 1521500/1155900 1.32 Answer to part E Return on equity = Net Income/Average stock holders equity 48800/898400 5.40% W.Note Average Stock holder equity = (Beginning Stock holder equity+ Ending Stock holder equity)/2 (874000+ 922800)/2 898400

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