ratio analysis, and d nancial position and operatin Condensed balance sheet and
ID: 2605292 • Letter: R
Question
ratio analysis, and d nancial position and operatin Condensed balance sheet and income statement data for Jergan Corporation are presented here. JERGAN CORPORATION Balance Sheet December 31 S18,000 S30,000 50,000 Accounts receivable (net) Other current assets 45,000 95,000 55,000 500,000 $725,000 64,000 45,000 358,000 S533,000 Plant and equipment (net) 370,000 S600,000 Current liabilities Long-term debt Common stock, S10 par Retained Earnings $80,000 85,000 310,000 125,000 S600,000 $85,000 145,000 50,000 175,000 $725,000 113,000 S533,000 JERGAN CORPORATION Income Statement For the Year Ended December 31 Sales revenue Less: Sales return and allowances Net sales Cost of goods sold Gross proft Operating expenses (including income taxes) Net income 2016 S600,000 30,000 570,000 350,000 S740,000 425,000 275,000 180,000 95.000 150,000 70,000Explanation / Answer
Calculatuon of profit margin ratio
Net income / net sale
2017 = $95000/$700000.× 100 = 13.57%
2016 = $70000/$570000 ×100. =12.28%
Calculation of gross profit ratio
Gross profit / net sales × 100
2017. = $ 275000/$700000×100. =39.29%
2016. = $ 220000/$570000×100. =38.60%
Calculatuon of assets turnover ratio
Average assets / net sales
Average assets of 2017 $725000+$600000/2 = $662500
Assets turnover ratio 2017 °=. $700000/662500. =1.06
Average assets in 2016 = $ 600000+$533000/2. =$566500
Assets turnover ratio 2016 = $570000/$566500. = 1.006
Calculatuon of Earning per share
Net income / average no of share
Average no share in 2017=( 32000+31000)/2. =31500
EPS 2017 = ($175000-$125000)/31500. =1.59
Average share in 2016 = (31000+30000)/2. = 30500
EPS 2016 =. ($125000-$113000)/30500. =.39
Calculatuon of price earings ratio
Market price per share / Earning per share
2017. = 8.50/1.59. = 5.34 per share
2016 = 7.50/.39. =19.23 per share
Calculation of dividend payout ratio
Calculatuon of cash dividend declared= $125000+$95000-$175000. =$45000
Payout ratio = dividend declared/ net income
Payout in 2017 = $45000/$95000. =.47 per share
Cash dividend 2016. =$113000+$ 70000-$125000. =$58000
Pay out ratio 2016 =. $58000/$70000. = .83 per share
Debt to assets ratio
Total debt / total assets
Total debt 2017 = $85000+$145000. = $230000
Debt to assets ratio 2017. =$230000/725000. =.32
Total debt in 2016. =. $80000+$85000. = $165000
Debt to assets ratio 2016. =$165000/$600000. =.275
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