ratio analysis and d nancial position and operatin Condensed

ratio analysis, and d nancial position and operatin Condensed balance sheet and income statement data for Jergan Corporation are presented here. JERGAN CORPORATION Balance Sheet December 31 S18,000 S30,000 50,000 Accounts receivable (net) Other current assets 45,000 95,000 55,000 500,000 $725,000 64,000 45,000 358,000 S533,000 Plant and equipment (net) 370,000 S600,000 Current liabilities Long-term debt Common stock, S10 par Retained Earnings $80,000 85,000 310,000 125,000 S600,000 $85,000 145,000 50,000 175,000 $725,000 113,000 S533,000 JERGAN CORPORATION Income Statement For the Year Ended December 31 Sales revenue Less: Sales return and allowances Net sales Cost of goods sold Gross proft Operating expenses (including income taxes) Net income 2016 S600,000 30,000 570,000 350,000 S740,000 425,000 275,000 180,000 95.000 150,000 70,000

Solution

Calculatuon of profit margin ratio

Net income / net sale

2017 = $95000/$700000.× 100 = 13.57%

2016 = $70000/$570000 ×100. =12.28%

Calculation of gross profit ratio

Gross profit / net sales × 100

2017. = $ 275000/$700000×100. =39.29%

2016. = $ 220000/$570000×100. =38.60%

Calculatuon of assets turnover ratio

Average assets / net sales

Average assets of 2017 $725000+$600000/2 = $662500

Assets turnover ratio 2017 °=. $700000/662500. =1.06

Average assets in 2016 = $ 600000+$533000/2. =$566500

Assets turnover ratio 2016 = $570000/$566500. = 1.006

Calculatuon of Earning per share

Net income / average no of share

Average no share in 2017=( 32000+31000)/2. =31500

EPS 2017 = ($175000-$125000)/31500. =1.59

Average share in 2016 = (31000+30000)/2. = 30500

EPS 2016 =. ($125000-$113000)/30500. =.39

Calculatuon of price earings ratio

Market price per share / Earning per share

2017. = 8.50/1.59. = 5.34 per share

2016 = 7.50/.39. =19.23 per share

Calculation of dividend payout ratio

Calculatuon of cash dividend declared= $125000+$95000-$175000. =$45000

Payout ratio = dividend declared/ net income

Payout in 2017 = $45000/$95000. =.47 per share

Cash dividend 2016. =$113000+$ 70000-$125000. =$58000

Pay out ratio 2016 =. $58000/$70000. = .83 per share

Debt to assets ratio

Total debt / total assets

Total debt 2017 = $85000+$145000. = $230000

Debt to assets ratio 2017. =$230000/725000. =.32

Total debt in 2016. =. $80000+$85000. = $165000

Debt to assets ratio 2016. =$165000/$600000. =.275