FINANCIAL+MANAG.ACCT.
9th Edition
ISBN: 9781260728774
Author: Wild
Publisher: RENT MCG
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Chapter 13, Problem 15QS
a.
To determine
Introduction: Financial ratios help in comparing the performance of the company with its previous performance as well as that of competitors in the industry. They are divided into four building blocks. These blocks are liquidity and efficiency, solvency, profitability, and market prospects.
To calculate: The profit margin.
b.
To determine
Introduction: Financial ratios help in comparing the performance of the company with its previous performance as well as that of competitors in the industry. They are divided into four building blocks. These blocks are liquidity and efficiency, solvency, profitability, and market prospects.
The return on total assets.
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Students have asked these similar questions
Edison Co. reported the following for the current year: net sales of $80,000; cost of goods sold of $56,000; net income of $16,000; beginning balance of total assets of $60,000; and ending balance of total assets of $68,000. Compute (a) profit margin and (b) return on total assets.
Calculating the Average Total Assets and the Return on Assets
The income statement, statement of retained earnings, and balance sheet for Santiago Systems are as follows:
Santiago Systems
Income Statement
For the Year Ended December 31, 20X2
Amount
Percent
Net sales
$5,345,000
100.0%
Less: Cost of goods sold
(3,474,250)
65.0
Gross margin
$1,870,750
35.0
Less: Operating expenses
(1,140,300)
21.3
Operating income
$730,450
13.7
Less: Interest expense
(27,000)
0.5
Income before taxes
Less: Income taxes (40%)*
$703,450
13.2
(281,380)
5.3
Net income
$422,070
7.9
* Includes both state and federal taxes.
Calculating the Average Total Assets and the Return on Assets
The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows. Also, assume a tax rate of 31%.
Somerville CompanyIncome StatementFor the Year Ended December 31, 20X2
Amount
Percent
Net sales
$8,281,989
100.0%
Less: Cost of goods sold
(5,383,293)
65.0
Gross margin
$2,898,696
35.0
Less: Operating expenses
(1,323,368)
16.0
Operating income
$1,575,328
19.0
Less: Interest expense
(50,000)
0.6
Income before taxes
$1,525,328
18.4
Less: Income taxes (31%)*
(472,852)
5.7
Net income
$1,052,476
12.7
* Includes both state and federal taxes.
Somerville CompanyStatement of Retained EarningsFor the Year Ended December 31, 20X2
Balance, beginning of period
$1,979,155
Net income
$1,052,476
Total
$3,031,631
Preferred dividends
(80,000)
Dividends to common stockholders
(201,887)
Balance, end of period…
Chapter 13 Solutions
FINANCIAL+MANAG.ACCT.
Ch. 13 - Prob. 1QSCh. 13 - Prob. 2QSCh. 13 - Prob. 3QSCh. 13 - Prob. 4QSCh. 13 - Prob. 5QSCh. 13 - Prob. 6QSCh. 13 - Prob. 7QSCh. 13 - Prob. 8QSCh. 13 - Prob. 9QSCh. 13 - Prob. 10QS
Ch. 13 - Prob. 11QSCh. 13 - Prob. 12QSCh. 13 - Prob. 13QSCh. 13 - Prob. 14QSCh. 13 - Prob. 15QSCh. 13 - Prob. 16QSCh. 13 - Prob. 17QSCh. 13 - Prob. 18QSCh. 13 - Prob. 19QSCh. 13 - Prob. 20QSCh. 13 - Prob. 21QSCh. 13 - Prob. 22QSCh. 13 - Prob. 1ECh. 13 - Prob. 2ECh. 13 - Prob. 3ECh. 13 - Prob. 4ECh. 13 - Prob. 5ECh. 13 - Exercise 13-6 Common-size percents P2
Simon...Ch. 13 - Prob. 7ECh. 13 - Exercise 13-8 Liquidity analysis and...Ch. 13 - Exercise 13-9 Risk and Capital structure analysis...Ch. 13 - Exercise 13-10 Efficiency and Profitability...Ch. 13 - Exercise 13-11 profitability analysis P3 Refer to...Ch. 13 - Prob. 12ECh. 13 - Prob. 13ECh. 13 - Prob. 14ECh. 13 - Prob. 15ECh. 13 - Prob. 16ECh. 13 - Prob. 17ECh. 13 - Prob. 18ECh. 13 - Prob. 1PSACh. 13 - Prob. 2PSACh. 13 - Prob. 3PSACh. 13 - Problem 13-4A Calculation of financial statement...Ch. 13 - Prob. 5PSACh. 13 - Prob. 6PSACh. 13 - Prob. 1PSBCh. 13 - Prob. 2PSBCh. 13 - Prob. 3PSBCh. 13 - Prob. 4PSBCh. 13 - Prob. 5PSBCh. 13 - Problem 13-6BAIncome statement computations and...Ch. 13 - Prob. 13SPCh. 13 - Prob. 1.1AACh. 13 - Prob. 1.2AACh. 13 - Prob. 1.3AACh. 13 - Prob. 2.1AACh. 13 - Prob. 2.2AACh. 13 - Prob. 2.3AACh. 13 - Prob. 3.1AACh. 13 - Prob. 3.2AACh. 13 - Prob. 3.3AACh. 13 - Prob. 1DQCh. 13 - Prob. 2DQCh. 13 - Prob. 3DQCh. 13 - Prob. 4DQCh. 13 - Prob. 5DQCh. 13 - Prob. 6DQCh. 13 - Prob. 7DQCh. 13 - Prob. 8DQCh. 13 - Prob. 9DQCh. 13 - Prob. 10DQCh. 13 - Prob. 11DQCh. 13 - Prob. 12DQCh. 13 - Where on the income statement does a company...Ch. 13 - Prob. 1BTNCh. 13 - Prob. 2BTNCh. 13 - Prob. 3BTNCh. 13 - Prob. 4BTNCh. 13 - ENTREPRENEURIAL DECISION A1 P1 P2 P3 BTN 13-7...
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