Award: 10.00 points The following condensed information was reported by Peabody

Question

Award: 10.00 points The following condensed information was reported by Peabody Toys, Inc., for 2018 and 2017: 2018 2017 Income statement information Net sales Net income Balance sheet information Current assets Property, plant, and equipment (net) 5,200 $ 4,200 180 124 $ 800 $ 750 950 $1,900 $1,700 $ 600 450 750 1.100 Total assets Current liabilities Long-term liabilities Paid-in capital Retained earnings 750 400 150 400 100 Liabilities and shareholders' equity s 1,900 1,700 Required: 1. Determine the following ratios for 2018 (Round your percentage answers to 1 decimal place.) 2. Determine the amount of dividends paid to shareholders during 2018. (Enter your answer in dollars.) 1a. Profit margin on sales 1b. Return on assets 1c. Return on shareholders' equity 2. Dividends paid

Explanation / Answer

Solution: 1a. Profit margin on sales 3.5% 1b. Return on assets 10.0% 1c. Return on shareholders' equity 34.3% 2. Dividend paid $130 Working Notes: 1a. Profit margin on sales for 2018 3.5% Profit margin on sales = Net income 2018 / Net Sales 2018 Profit margin on sales = $180/ $5,200 Profit margin on sales = 0.034615 Profit margin on sales = 3.4615 % Profit margin on sales = 3.5% 1b. Return on assets 10.0% Return on assets = Net Income 2018/(total assets 2018 + Total assets 2017)/2 Return on assets = $180/($1900 + $1,700)/2 Return on assets = $180/1800 Return on assets = 0.10 Return on assets = 10.0% 1c. Return on shareholders' equity 34.3% Return on shareholders' equity = Net income 2018 /(paid in capital 2018 + Retained earnings 2018 +paid in capital 2017 + Retained earnings 2017)/2 Return on shareholders' equity = 180 /(400+150+400+100)/2 Return on shareholders' equity = 180 /525 Return on shareholders' equity = 0.342857 Return on shareholders' equity = 34.3% 2. Dividend paid $130 Notes: Retained earnings beginning of period 100 of 2017 Add: Net income 180 of 2018 Less: Retained earnings end of period (150.00) of 2018 Dividends paid 2018 130.00 Please feel free to ask if anything about above solution in comment section of the question.

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