Question 1 Selected comparative statement data for Queen Products Company are pr

Question

Question 1 Selected comparative statement data for Queen Products Company are presented below. All balance sheet data are as of December 31 2017 2016 Net sales Cost of goods sold Interest expense Net income Accounts receivable Inventory Total assets Total common stockholders' equity 475,000 6,000 45,000 115,000 80,000 575,000 425,000 $715,000 435,000 4,000 37,000 100,000 70,000 495,000 320,000 Compute the following ratios for 2017, (Round answers to 1 decimal place, e.g. 1.6, or 1.6% .) Profit margin Asset turnover times Return on assets Return on common stockholders equity

Explanation / Answer

Profit margin: net Income / Net sales *100 $ 45000/755000 *100= 5.96% Assets turnover: Net sales / Average assets Average assets = (575000+495000)/2 = 535,000 Assets turnover ratio : $755,000 /535,000 = 1.41 times Return on Assets: Net Income / Average assets *100 $ 45000 /535,000 *100 = 8.41% Return on Common Stockholder's equity = Net income /Average Equity *100 Average Equity (425000+320000)/2= $372,500 Return on Common Equity = 45000/372500*100 = 12.08% Profit margin 5.96% Assets turnover 1.41 times Return on Assets 8.41% Return on equity 12.08%

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