Chapter 4, Problem 4.27E

Profitability ratios

• LO4–10

The following condensed information was reported by Peabody Toys, Inc., for 2018 and 2017:

		($ in thousands)
	2018	2017
Income statement information
Net income	180	124
Balance sheet information
Current assets	$ 800	$ 750
Property, plant, and equipment (net)	1,100	950
Total assets	$1,900	$1,700
Current liabilities	$600	$450
Long-term liabilities	750	750
Paid-in capital	400	400
Retained earnings	150	100
Liabilities and shareholders’ equity	$1,900	$1,700

Required:

1. Determine the following ratios for 2018:

a. Profit margin on sales

b. Return on assets

c. Return on shareholders’ equity

2. Determine the amount of dividends paid to shareholders during 2018.