Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $13.0 m

ID: 2733840 • Letter: M

Question

Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $13.0 million, gross profit of $7.90 million, EBIT of $6.1 million, net income available to common stockholders of $3.7 million, and common stock dividends of $1.7 million. The 2015 year-end balance sheet listed total assets of $53.0 million and common stockholders' equity of $21.5 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.)

Explanation / Answer

a)Met margin ratio =net margin /sales

= 3.7/13 =.2846 or 28.46%

b)Gross profit margin =Gross profit margin /sales

= 7.9/13 = .6077 or 60.77%

c)operating profit margin =EBIT/sales

= 6.1/13 = 46.92%

d)Basic earning power =EBIT /Total asset

= 6.1/53 =.1151 or 11.51%

e)Return on asset =net income /total asset

= 3.7/53 = .0698 or 6.98%

G)Return on equity =Net income /equity

= 3.7/21.5 =.1721 or 17.21%

h)Dividend payout = dividend paid /earnings available

= 1.7 / 3.7 = .4595 or 45.95%

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Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $13.0 m

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