4. Mercedes, Co has the following quartertly financial information. Sales revenu
ID: 2436601 • Letter: 4
Question
4. Mercedes, Co has the following quartertly financial information. Sales revenue Cost of goods sold Operating expenses Interest expense Income tax expense 4 Quarter 3 Quarter 2n'd Quarter 1t Quarter $951,800 $981,300 $959,800 $967,400 307,000 319,600 319200 324,400 250,200 21,800 259.800 263,900 4,750 88,800 89,700 89,70092.200 4,8504,850 4.850 4 Average number of common shares outstanding Stock price when C4 EPS released 805,530 800,584 802,170815.500 S 24 Cas prft pererna efreach ouarer (Do not round your intermediate calcufations and round your final answer to 2 decimal places.) Gross Prof b. Calculate the net profit margin for each quarner. (Do not round your intermediate calculations and round your final answer to 2 decimal places) 04 Ne Proft Margin Calculane the EP3 for each quanar (Do not round your intermediate caleulations and round your final answer to 2 decimal places.) 04 02 EPS d Cauae the Poce Eamngs aro ay tre and ofne tDo not round your intermediate calculations and round your final answer to 2 decial places)Explanation / Answer
a. In order to Calculate Gross Profit Percentage, we should know the gross profit. Following is the formula for calculating net profit.
Gross profit = Net Sales – Cost of goods sold
Applying the above formula in each quarter:
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Net Sales
961,800
961,300
959,600
967,400
Less: Cost of goods sold
(307,000)
(319,600)
(319,200)
(324,400)
Gross Profit
654,800
641,700
640,400
643,000
Gross Profit percentage or Gross Profit Margin is the ratio of gross profit to total sales expressed as a percentage. The formula for calculating gross profit margin / percentage is:
Gross Profit Percentage or Margin = Gross Profit / Sales
By applying above formula in each quarter we will get gross profit percentage
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Gross Profit
Net Sales
654,800
961,800
641,700
961,300
640,400
959,600
643,000
967,400
Gross Profit Percentage (%)
68.08%
66.75%
66.73%
66.46%
b. Net Profit margin can be calculated only after finding Net Profit. Formula for calculating net profit margin is:
Net Profit Margin = Net Profit / Net Sales
We can calculate Net Profit by following the steps in the below table:
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Net Sales
961,800
961,300
959,600
967,400
Less: Cost of goods sold
(307,000)
(319,600)
(319,200)
(324,400)
Gross Profit
654,800
641,700
640,400
643,000
Less: Operating Expenses
(250,200)
(261,600)
(259,800)
(263,900)
Operating Income
404,600
380,100
380,600
379,100
Less: Interest expenses
(4,850)
(4,850)
(4,850)
(4,750)
Income before Tax
399,750
375,250
375,750
374,350
Less: Income tax expenses
(86,800)
(89,700)
(89,700)
(92,200)
Income after tax or Net Profit/Income ($)
312,950
285,550
286,050
282,150
Net Profit Margin = Net Profit / Net Sales
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Net Profit
Net Sales
312,950
961,800
285,550
961,300
286,050
959,600
282,150
967,400
Net Profit Margin(%)
32.53%
66.75%
29.80%
29.16%
c. Earnings per share or EPS is calculated using the following formula:
EPS = Net Income / Average outstanding shares
Applying the above formula in each quarters:
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Net Profit
Average Outstanding Shares
312,950
805,530
285,550
800,654
286,050
802,170
282,150
815,500
EPS($)
$ .3885
$ .3566
$ .3565
$ .3459
d. Price Earnings Ratio at the end of the year can calculated by using the following formula:
Price Earnings Ratio = Price Per Share / Earnings Per Share
Here Stock price of 4th Quarter is given , so take it as Price per share.
Then, Price Earnings Ratio = 24 / .3885
= $ 61.77
4th Quarter
3rd Quarter
2nd Quarter
1st Quarter
Net Sales
961,800
961,300
959,600
967,400
Less: Cost of goods sold
(307,000)
(319,600)
(319,200)
(324,400)
Gross Profit
654,800
641,700
640,400
643,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.