Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $14.4 m
ID: 2445140 • Letter: M
Question
Maggie’s Skunk Removal Corp.’s 2015 income statement listed net sales of $14.4 million, gross profit of $9.40 million, EBIT of $7.5 million, net income available to common stockholders of $5.1 million, and common stock dividends of $3.1 million. The 2015 year-end balance sheet listed total assets of $54.4 million and common stockholders' equity of $22.9 million with 2.0 million shares outstanding.
Calculate the profit margin. (Round your answer to 2 decimal places.)
Profit margin %
Calculate the profit margin. (Round your answer to 2 decimal places.)
Gross profit margin %
Calculate the profit margin. (Round your answer to 2 decimal places.)
Operating profit margin %
Calculate the basic earnings power. (Round your answer to 2 decimal places.)
Basic earnings power %
Calculate the return on assets. (Round your answer to 2 decimal places.)
Return on assets %
Calculate the return on equity. (Round your answer to 2 decimal places.)
Return on equity %
Calculate the dividend payout. (Round your answer to 2 decimal places.)
Dividend payout %
Explanation / Answer
1. Computation of profit margin
Profit margin = net income / net sales
= $5 .1 / $ 14.4 = 35.42%
2. Computation of Gross profit margin
Gross profit margin = Gross profit / net sales
= $9.40 / $14.4 = 65.28%.
3. computation of profit margin
Operating profit margin = Operating profit / net sales
= $7.5 / $14.4 = 52.08%
4. Computation of Basic earnings power
Basic earnings power = EBIT / Total assets
= $7.5 / $ 54.4 = 13.78%
5. Computation of Return on Assets
Return on assets = EBIT / total assets
= $7.5 / $54.4 = 13.79%
6. Computation of Return on equity
Return on Equity = EAT / Equity share holders fund
= 5.1 / 22.9 = 22.27%
7. Computation of Dividend payout ratio
Dividend payout ratio = Dividend per share / Earnings per share
= 5.1 /2 / 3.1/2
= 2.55 / 1.55 = 1.65.
Return on assets =
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