Ratio proficiency McDougal Printing, Inc., had sales totaling $40,000,000 in fis
ID: 2808106 • Letter: R
Question
Ratio proficiency McDougal 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. McDougal Printing, Inc Year Ended December 31, 2015 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 Sales Gross profit margin Operating profit margin Net profit margin Return on total assets Return on common equity Total asset turnover Average collection period S40,000,000 80% 35% 8% 16.0% 20% 2.0 62.2 daysExplanation / Answer
a)
Gross profit margin = Gross profit / sales
0.8 = Gross profit / 40,000,000
Gross profit = $32,000,000
b)
Cost of goods sold = Sales - gross profit
Cost of goods sold = 40,000,000 - 32,000,000
Cost of goods sold = $8,000,000
c)
Operating profit margin = Operating profit / sales
0.35 = Operating profit / 40,000,000
Operating profit = $14,000,000
d)
Operating expense = Gross profit - operating profit
Operating expense = 32,000,000 - 14,000,000
Operating expense = $18,000,000
e)
Net profit margin = Earnings available to shareholders / sales
0.08 = Earnings available to shareholders / 40,000,000
Earnings available to shareholders = $3,200,000
f)
Retrun on total assets = Net income / Total assets
0.16 = 3,200,000 / Total assets
Total assets = $20,000,000
g)
Return on common equity = Net income / total common stock equity
0.2 = 3,200,000 / total common stock equity
total common stock equity = $16,000,000
h)
Average collection period = 365 / Receivables turnover
62.2 = 365 / Receivables turnover
Receivables turnover = 5.868
Receivables turnover = Sales / Average receivables
5.868 = 40,000,000 / Average receivables
Average receivables = $6,816,632.58
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