Chapter 2: Q4BP (page 78)
Billy’s Crystal Stores Inc. has assets of $5,960,000 and turns over its assets 1.9 times per year. Return on assets is 8 percent. What is the firm’s profit margin (return on sales)?
The profit margin of the company is 4.21%.
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Precision Systems had sales of \(820,000, cost of goods of \)510,000, selling and administrative expense of \(60,000, and operating profit of \)103,000. What was the value of depreciation expense? Set this problem up as a partial income statement and determine depreciation expense as the “plug” figure required to obtain the operating profit.
What are the three primary sections of the statement of cash flows? In what section would the payment of a cash dividend be shown?
Easter Egg and Poultry Company has \(2,000,000 in assets and \)1,400,000 of debt. It reports net income of $200,000.
b. What is its return on stockholders’ equity?
Prepare an income statement for Virginia Slim Wear. Take your calculations all the way to computing earnings per share.
Sales | 1,360,000 |
Shares outstanding | 104,000 |
Cost of goods sold | 700,000 |
Interest expenses | 34,000 |
Selling and administration expenses | 49,000 |
Depreciation expenses | 23,000 |
Preferred stock dividend | 86,000 |
Taxes | 100,000 |
Using the income statement for Times Mirror and Glass Co., compute the following ratios:
b. The fixed charge coverage.
Times mirror and glass company | |
Sales | \(126,000 |
Less: Cost of goods sold | 93,000 |
Gross profit | \)33,000 |
Less: selling and administrative expenses | 11,000 |
Lease Expenses | 4,000 |
Operating profit* | \(18,000 |
Less: Interest expenses | 3,000 |
Earning before taxes | \)15,000 |
Less: Taxes (30%) | 4,500 |
Earning after taxes | $10,500 |
*equal income before interest and taxes
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