Maggie\'s Skunk Removal Corp.\'s 2012 income statement listed net sales of $12.9

Question

Maggie's Skunk Removal Corp.'s 2012 income statement listed net sales of $12.9 million, EBIT of $6.0 million, net income available to common stockholders of $3.6 million, and common stock dividends of $1.6 million. The 2012 year-end balance sheet listed total assets of $52.9 million and common stockholders' equity of $21.4 million with 2.0 million shares outstanding.

Calculate the profit margin. (Round your answer to 2 decimal places.)

Calculate the basic earnings power. (Round your answer to 2 decimal places.)

Calculate the return on assets. (Round your answer to 2 decimal places.)

Calculate the return on equity. (Round your answer to 2 decimal places.)

Calculate the dividend payout. (Round your answer to 2 decimal places.)

Calculate the profit margin. (Round your answer to 2 decimal places.)

Explanation / Answer

Calculate the profit margin. (Round your answer to 2 decimal places.)

Profit margin = net income available to common stockholders/Sales

= 3.6/12.9 =27.91%

Calculate the basic earnings power. (Round your answer to 2 decimal places.)

Basic earnings power -= EBIT/Total asset = 6/52.9 = 11.34%

Calculate the return on assets. (Round your answer to 2 decimal places.)

ROA =

Return on assets = Profit Margin * (Sales/TA) = 27.91%*(12.9/52.9) = 6.81%

Calculate the return on equity. (Round your answer to 2 decimal places.)

Return on equity = net income available to common stockholders/Common equity

= 3.6/21.4 = 16.82%

Calculate the dividend payout. (Round your answer to 2 decimal places.)

Dividend payout % = Dividend/Net Income = 1.6/3.6 = 44.44%

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