P13-3A Perform ratio analysis, and discuss change in financial position and oper

Question

P13-3A Perform ratio analysis, and discuss change in financial position and operating results 2 Condensed balance sheet and income statement data for Jergan Corporation are presented here. JERGAN CORPORATION Balance Sheet December 31 2015 Cash Accounts receivable (net) Other current assets Investments Plant and equipment (net) 2017 $30,000 50,000 90,000 55,000 500,000 2016 $20,000 45,000 95,000 70,000 370,000 $18,000 48,000 64,000 45,000 10 358,000 $725,000$ $600,000 $533,000 14 Current liabilities Long-term debt Common stock, $10 par Retained Earnings $85,000 45,000 320,000 175.000 $725,000 $80,000 $%70,000 50,000 300,000 113,000 $600,000$533,000 16 85,000 310,000 125.000 191 JERGAN CORPORATION Income Statement For the Year Ended December 31 23 2017 740,000 $600,000 40,000 700,000 425,000 2016 Sales revenue Less Sales return and allowances Net sales Cost of goods sold 30,000 570,000 29 350,000 F13-3 I F12-d | D12

Explanation / Answer

2)We have seen improvement in the performance in the year 2017 in comparision to 2016. There is a increase in Gross and Net margin. There is a increase in Sales and Net income of the company. Also Common Stockholders earnings per share also increased . We have seen the market price of the stock also increased due to good peformance.

(a)(1) Profit Margin 2017 2016 Net Income $        95,000.00 $      70,000.00 Net Sales $      700,000.00 $    570,000.00 Profit Margin 13.57% 12.28% (a)(2) Gross Profit rate 2017 2016 Gross Profit $      275,000.00 $    220,000.00 Net Sales $      700,000.00 $    570,000.00 Gross Profit rate 39.29% 38.60% (a)(3) Asset Turnover 2017 2016 Total Assets,2017 $      725,000.00 Total Assets,2016 $      600,000.00 $    600,000.00 Total Assets,2015 $    533,000.00 Average Total assets $      662,500.00 $    566,500.00 Net Sales $      700,000.00 $    570,000.00 Average Total assets $      662,500.00 $    566,500.00 Asset Turnover                       1.06                     1.01 (a)(4) Earnings Per Share 2017 2016 Common Shares Outstanding 2017 $        32,000.00 Common Shares Outstanding 2016 $        31,000.00 $      31,000.00 Common Shares Outstanding 2015 $      30,000.00 AverageCommon Shares Outstanding $        31,500.00 $      30,500.00 Net income-Pfd Dividend $        95,000.00 $      70,000.00 Average Common Shares Outstanding $        31,500.00 $      30,500.00 Earnings Per Share $                   3.02 $                 2.30 (a)(5) Price-Earnings Ratio 2017 2016 Stock Price Per Share $                   8.50 $                 7.50 Earnings Per Share $                   3.02 $                 2.30 Price-Earnings Ratio                       2.82                     3.27 (a)(6) Payout Ratio 2017 2016 Prior Year's Retained Earnings $      125,000.00 $    113,000.00 plus: Current Year Net Income $        95,000.00 $      70,000.00 Less- Current Year's Retained Earnings $    (175,000.00) $ (125,000.00) Cash dividend declared $        45,000.00 $      58,000.00 Cash dividend declared (Common) $        45,000.00 $      58,000.00 Net income $        95,000.00 $      70,000.00 Payout Ratio 47.37% 82.86% (a)(7) Debt to assets ratio 2017 2016 Current Liabilites $        85,000.00 $      80,000.00 Long term debt $      145,000.00 $      85,000.00 Total liabilites $      230,000.00 $    165,000.00 Total assets $      725,000.00 $    600,000.00 Debt to assets ratio $                   0.32 $                 0.28

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