Ratios (Appendix) Byers Company presents the following condensed income statemen
ID: 2611014 • Letter: R
Question
Ratios (Appendix)
Byers Company presents the following condensed income statement for 2016 and condensed December 31, 2016, balance sheet:
Additional information:
The company's common stock was outstanding the entire year.
Dividends of $1.50 per share on the common stock were declared in 2016.
On December 31, 2016, common stock is selling for $20 per share.
On January 1, 2016, the accounts receivable (net) balance was $24,000, total assets amounted to $380,000, and total shareholders' equity was $241,000.
Of the company's net sales, 78% are on credit.
The company operates on a 365-day business year.
Required
On the basis of the preceding information, compute the following ratios for the Byers Company:
(Round to two decimal places.)
Income Statement Sales (net) $267,000 Less: Cost of goods sold $160,000 Operating expenses 62,000 Interest expense 11,000 Income taxes 10,000 Total expenses (243,000) Net income $24,000Explanation / Answer
1. EPS = (Net income – preferred dividend)/ Average o/s common stock
= (24000 - ))/10000
= $2.4 per share
2. Gross margin ratio = Gross profit/ sales revenue
= 107000/ 267000
= 40.07
3. Operating profit margin = Operating income/ net sales
= 45000/ 267000
= 16.85%
4. Net profit margin = Net income/ total revenue
= 24000/ 267000
= 0.0898 or 8.98%
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