Homework SourseRatios Appendix Byers Company presents the following condens
Ratios (Appendix)
Byers Company presents the following condensed income statement for 2016 and condensed December 31, 2016, balance sheet:
Additional information:
The company\'s common stock was outstanding the entire year.
Dividends of $1.50 per share on the common stock were declared in 2016.
On December 31, 2016, common stock is selling for $20 per share.
On January 1, 2016, the accounts receivable (net) balance was $24,000, total assets amounted to $380,000, and total shareholders\' equity was $241,000.
Of the company\'s net sales, 78% are on credit.
The company operates on a 365-day business year.
Required
On the basis of the preceding information, compute the following ratios for the Byers Company:
(Round to two decimal places.)
| Income Statement | |||
| Sales (net) | $267,000 | ||
| Less: | |||
| Cost of goods sold | $160,000 | ||
| Operating expenses | 62,000 | ||
| Interest expense | 11,000 | ||
| Income taxes | 10,000 | ||
| Total expenses | (243,000) | ||
| Net income | $24,000 |
Solution
1. EPS = (Net income – preferred dividend)/ Average o/s common stock
= (24000 - ))/10000
= $2.4 per share
2. Gross margin ratio = Gross profit/ sales revenue
= 107000/ 267000
= 40.07
3. Operating profit margin = Operating income/ net sales
= 45000/ 267000
= 16.85%
4. Net profit margin = Net income/ total revenue
= 24000/ 267000
= 0.0898 or 8.98%
--------------------------------------------------------------------------------------------------------------------
Hope that helps.
Feel free to comment if you need further assistance J
