A company\'s calendar-year financial data are shown assets of $339 common stock

Question

A company's calendar-year financial data are shown assets of $339 common stock below. The company had total 000 and total equity of $144,400 for the prior year. No additional shares of were issued during the year. The December 31 market price per share is S49.50. Cash dividends of S19,500 were paid during the year. Calculate the following ratio Margin eeme (a) profit margin ratio (b) gross margin ratio (c) return on total assets (d) return on common stockholders' equity (e) book value per common share (f) basic earnings per share (g) price earnings ratico h) dividend yield. Net Sales b)Gross Morgn es caves-Goss of 60.000- 4 SA 351,00 ng er Share $650,000 eu 422,500 $227,500 SHOCH 140.500: Net incom s 87,000 ouros c Net sales Cost of goods sold. Operating income. Interest expense. 9.100 77,900 S54,500 Ending Income before taxes 3,400 Net income 5.0 Balances S 19,500 65,000 Cash Accounts receivable (net. Inventory. Plant assets (net Total assets.. 71,500: 195,000 $351,000 S 74,100 Current liabilities. Long-term notes payable Common stock, $5 par value Retained earnings. Total liabilities and equity. 97,500 comm 65,000 114.400 Shas $35100w of

Explanation / Answer

a) Profit Margin Ratio = (Net Income/Net Sales)*100

= ($54,500/$650,000)*100 = 8.38%

b) Gross Margin Ratio = (Gross Profit/Net Sales)*100

= ($227,500/$650,000)*100 = 35%

c) Return on Total Assets = (Net Income/Average Total Assets)*100

Average Total Assets = (Opening Total Assets + Closing Total assets)/2

= ($339,000+351,000)/2 = $345,000

Return on Total Assets = ($54,500/$345,000)*100 = 15.80%

d) Return on common stockholder's equity = (Net Income/Average Stockholder's equity)*100

Closing stockholder's equity = Common Stock + retained Earnings = $65,000+$114,400 = $179,400

Average Stockholder's equity = (Opening equity+Closing equity)/2

= ($144,400+$179,400)/2 = $161,900

Return on common stockholder's equity = ($54,500/$161,900)*100 = 33.66%

e) Book Value per common share = Common Stockholder's equity/No. of common shares

No. of common shares = $65,000/$5 = 13,000 shares

Common Stockholder's equity = $179,400

Book value per share = $179,400/13,000 shares = $13.80 per share

f) Basic Earnings per share = Net Income/No. of common shares = $54,500/13,000 shares

= $4.19 per share

g) Price Earnings Ratio = Market price per share/Earnings per share

= $49.50/$4.19 = 11.81 times

h) Dividend Yield = (Dividend per share/Market price per share)*100

Dividend per share = Dividend/No. of shares = $19,500/13,000 = $1.5 per share

Dividend yield = ($1.5/$49.50)*100 = 3.03%

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