Jergan Corporation Income Statements For the Years Ended December 31 2020 2019 Sales revenue $740,000 $600,000 Less: Sales returns and allowances 40,000 30,000 Net sales 700,000 570,000 Cost of goods sold Gross profit Operating expenses (including income taxes) 425,000 350,000 275,000 220,000 180,000 150,000 Net income $ 95,000 $ 70,000 Additional information: 1. The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2018, 2019, and 2020, respectively. 2. You must compute dividends paid. All dividends were paid in cash. Instructions a. Compute the following ratios for 2019 and 2020. •1. Profit margin. •2. Gross profit rate. •3. Asset turnover. •4. Earnings per share. •5. Price-earnings ratio. •6. Payout ratio. •7. Debt to assets ratio. b. Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2019 to 2020 of Jergan Corporation.

Jergan Corporation Income Statements For the Years Ended December 31 2020 2019 Sales revenue $740,000 $600,000 Less: Sales returns and allowances 40,000 30,000 Net sales 700,000 570,000 Cost of goods sold Gross profit Operating expenses (including income taxes) 425,000 350,000 275,000 220,000 180,000 150,000 Net income $ 95,000 $ 70,000 Additional information: 1. The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2018, 2019, and 2020, respectively. 2. You must compute dividends paid. All dividends were paid in cash. Instructions a. Compute the following ratios for 2019 and 2020. •1. Profit margin. •2. Gross profit rate. •3. Asset turnover. •4. Earnings per share. •5. Price-earnings ratio. •6. Payout ratio. •7. Debt to assets ratio. b. Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2019 to 2020 of Jergan Corporation.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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