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.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Tutorial 6 - Qs Brief (1)
QUESTION 7
P18.3A
Р18.ЗА (LO 3)
Jergan Corporation are presented here.
Perform ratio analysis, and discuss changes in financial position and operating results.
Jergan Corporation
Balance Sheets
December 31
Condensed balance sheet and income statement data for
2020
2019
2018
Cash
$ 30,000
$ 20,000
$ 18,000
Accounts receivable (net)
50,000
45,000
48,000
Other current assets
90,000
95,000
64,000
Investments
55,000
70,000
45,000
Plant and equipment (net)
500,000
370,000
358,000
$725,000
$600,000
$533,000
Current liabilities
$ 85,000
$ 80,000
$ 70,000
Long-term debt
Common stock, $10 par
145,000
85,000
50,000
320,000
310,000
300,000
Retained earnings
175,000
125,000
113,000
$725,000
$600,000
$533,000
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
425,000
350,000
275,000
220,000
Operating expenses (including income taxes)
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.
QUESTION 8
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