Compute the following ratios for Pine Corp.: Return on sales Asset turnover (Assume that total assets at
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Question:
- Return on sales
- Asset turnover (Assume that total assets at the beginning of the year were $1,600,000.)
- Return on assets
- Return on common stockholders' equity (Assume that the only changes in stockholders' equity during the year were from the net income for the year and dividends on the preferred stock.)
When computing percentage amounts, carry out calculations to four decimal places, but enter your answers to two decimal places; for example, .17856 rounds to .1786 and would be entered as 17.86.
a. Return on sales | fill in the blank 1 | % |
b. Asset turnover (round to 2 decimal places) | fill in the blank 2 | times |
c. Return on assets | fill in the blank 3 | % |
d. Return on common stockholders' equity | fill in the blank 4 | % |
2. Comment on Evergreen’s use of leverage. Has it successfully employed leverage?
Return Ratios and Leverage
The following selected data are taken from the financial statements of Pine Corp.:
Sales revenue | $662,000 | |
Cost of goods sold | 393,000 | |
Gross profit | $269,000 | |
Selling and administrative expenses | 100,000 | |
Operating income | $169,000 | |
Interest expense | 50,000 | |
Income before tax | $119,000 | |
Income tax expense (40%) | 47,600 | |
Net income | $71,400 | |
Accounts payable | $45,000 | |
Accrued liabilities | 70,000 | |
Income taxes payable | 10,000 | |
Interest payable | 25,000 | |
Short-term loans payable | 150,000 | |
Total current liabilities | $300,000 | |
Long-term bonds payable | $500,000 | |
Preferred stock, 10%, $100 par | $250,000 | |
Common stock, no par | 600,000 | |
Retained earnings | 350,000 | |
Total stockholders' equity | $1,200,000 | |
Total liabilities and stockholders' equity | $2,000,000 |
Related Book For
Using Financial Accounting Information The Alternative to Debits and Credits
ISBN: 978-1133161646
7th Edition
Authors: Gary A. Porter, Curtis L. Norton
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