Ratio proficiency McDougal Printing, Inc., had sales totaling $40,000,000 in fis
ID: 2794122 • Letter: R
Question
Ratio proficiencyMcDougal Printing, Inc., had sales totaling $40,000,000
in fiscal year 2015. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a 365-day year.
Calculate values for the following:
a. Gross profits
b. Cost of goods sold
c. Operating profits
d. Operating expenses
e. Earnings available for common stockholders
f. Total assets
g. Total common stock equity
h. Accounts receivable
McDougal Printing, Inc.
Year Ended December 31, 2015
Sales
$ 40 000,000
Gross profit margin
78%
Operating profit margin
36%
Net profit margin
55%
Return on total assets
9.5%
Return on common equity
19%
Total asset turnover
1.9
Average collection period
63.9 days
Calculate values for the following:
a. Gross profits
b. Cost of goods sold
c. Operating profits
d. Operating expenses
e. Earnings available for common stockholders
f. Total assets
g. Total common stock equity
h. Accounts receivable
McDougal Printing, Inc.
Year Ended December 31, 2015
Sales
$ 40 000,000
Gross profit margin
78%
Operating profit margin
36%
Net profit margin
55%
Return on total assets
9.5%
Return on common equity
19%
Total asset turnover
1.9
Average collection period
63.9 days
Explanation / Answer
Answer to A Gross Profits = Sales x Gross Profit Ratio = 40000000 x 78% = 31200000 Answer to B Cost of Goods Sold = Sales x (1 - Gross Profit Ratio) = 40000000 x(1- 0.78) = 8800000 Answer to C Operating Profits = Sales x Operating Profit Ratio = 40000000 x 36% = 14400000 Answer to D Operating Expenses = 40000000 x (Gross Profit Margin Ratio - Operating Profit Ratio ) = 40000000 x (78% - 36%) = 12800000 Answer to E Earning Available = Sales x Net Profit Ratio = 40000000 x 55% = 22000000 Answer to F Total Assets = Net Income / Return on total assets = 22000000 / 0.095 = 231578947 Answer to G Total Common Equity = Net Income / Return on common Equity = 22000000 / 0.19 = 115789474 Answer to H Account Receivable = Sales x Average Collection Period = 40000000 x 63.90 / 365 = 7002740
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