Condensed balance sheet and income statement data for Jergan Corporation are presented here.

Additional information:

1. The market price of Jergan?s common stock was $7.00, $7.50, and $8.50 for 2018, 2019, and 2020, respectively.

2. You must compute dividends paid. All dividends were paid in cash.

Instructions

a. Compute the following ratios for 2019 and 2020.

1. Profit margin.

2. Gross profit rate.

3. Asset turnover.

4. Earnings per share.

5. Price-earnings ratio.

6. Payout ratio.

7. Debt to assets ratio.

b. Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2019 to 2020 of Jergan Corporation.

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Jergan Corporation Balance Sheets December 31 2019 2020 2018 $ 30,000 $ 20,000 $ 18,000 Cash Accounts receivable (net) 48,000 50,000 45,000 |Other current assets 90,000 95,000 64,000 Investments 55,000 70,000 45,000 Plant and equipment (net) 500.000 370.000 358.000 $725,000 $600,000 $533,000 $ 85,000 $ 80,000 $ 70,000 Current liabilities Long-term debt Common stock, $10 par 145,000 85,000 50,000 320,000 310,000 300,000 Retained earnings 175.000 125.000 113.000 $725,000 $600,000 $533,000 Jergan Corporation Income Statements For the Years Ended December 31 2020 2019 Sales revenue $740,000 $600,000 Less: Sales returns and allowances 40.000 30,000 Net sales 700,000 570,000 Cost of goods sold 425.000 350.000 Gross profit 275,000 220,000 Operating expenses (including income taxes) 180.000 150.000 Net income $ 95,000 $ 70,000