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 $5,501 Cost of goods sold 3,300 3,701 Net income 85 110 Accounts receivable 75 102 Inventory 1,150 1,250 Total assets 2,850 3,250 Total common stockholders’ equity 900 1,121

Explanation / Answer

a) Profit margin = Ner income / Net sales

85 / 4750 = 1.79%

b) Asset turnover :

average total assets = Opening assets + closing assets / 2

= 3250 + 2850 / 2 = 3050

Assets turnover = Net sales / Average total assets

= 4750 / 3050

= 1.56 times

C) Return on assets = Net income / Average net assets

= 85 / 3050

= 2.79%

D)  Return on common stockholders’ equity = 85 / 900 + 1121 / 2

= 85 /1010.5

= 8.41%

E) Gross profit rate = 4750 - 3300 / 4750

= 1450 / 4750

= 30.53%

  

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