Study Practice Open Assignmvent RESOURCES Exercise 188 Sele

Study & Practice Open Assignmvent RESOURCES Exercise 18-8 Selected comperative statement data for Queen Products Company are presented below. Al bslance sheet data are as of December 31. 2017 2016 750,000$720,000 480,000 440,000 5,000 45,00042,000 20,000 100,000 85,000 75,000 80,000500,000 30,000 325,000 Net sales Cost of goods sold 7,000 Resuits by Study Interest expense Net income Accounts recelvable Total common stockhoiders equity Compte folowing rotos for 2017. (Round answes to decima, place,1.6, or 1.6% .) Profit margin Asset turnover Retum on assets Retu on common stockhoiders equity Reuerved A Division of 8 ncommand commandoption

Solution

Profit Margin = Net Income / Net Sales Profit Margin = $45,000 / $750,000 Profit Margin = 6% Assets Turnover = Sales / Average Total Assets Average Total Assets = ($500,000 + $580,000) / 2 Average Total Assets = $540,000 Assets Turnover = $750,000 / $540,000 Assets Turnover = 1.39 times (Approx.) Return on Assets = Net Income / Average Total Assets Return on Assets = $45,000 / $540,000 Return on Assets = 8.33% Some, also calculate: Return on Assets = (Net Income + Interest) / Average Total Assets Return on Assets = ($45,000 + $7,000) / $540,000 Return on Assets = 9.63% (Approx.) Return on Common Shareholders\' Equity = (Net Profit - Preference Dividend) / Average Common Shareholders\' Equity Average Common Shareholders\' Equity = ($325,000 + $430,000) / 2 Average Common Shareholders\' Equity = $377,500 Return on Common Shareholders\' Equity = ($45,000 - $0) / $377,500 Return on Common Shareholders\' Equity = 11.92%