Windswept Woodworks, Inc. Input Data (millions of dollars) Year 2 Year 1 496 1,3

Question

Windswept Woodworks, Inc. Input Data (millions of dollars) Year 2 Year 1 496 1,340 6,806 284 1,244 1,500 434 Accounts payable Accounts receivable Accum Cash & equivalent Common stock Cost of goods sold 6,682 178 1,170 n.a n.a n.a n.a 1,076 n.a 786 ulated depreciation Common stock dividends paid 140 1,074 602 872 230 10,260 3,122 3,018 116 Addition to retained earnings Long-term debt 10,000 Retained earnings Sales 2,526 n.a 34% Tax rate Market price per share - year end Number of shares outstanding n.a $ 17.50 S 19.80 500 million million Net profit = 827.64 a. Calculate Windswept Woodworks' return on equity for year 2. (Round your answer to 2 decimal places.) ROE Calculate the following items for Windswept Woodworks for year 2. (Round your answers to 2 decimal places.) c. Tax burden ratio 0.66 d. Interest burden ratio e. Asset turnover ratio f. Leverage ratio

Explanation / Answer

a)ROE= Net income/Average equity
Equity Year 1=common stock+Retianed earnings
=1170+2526=3696
Year 2=1244+3122+602=4968
net income=827.64
ROE=827.64/((4968+3696)/2)
=19.11%

b)Profit margin= Net income/sales
=827.64/3018=27.42%
c)Tax burden ratio=Net income/Pretax income
Pretax income=sales-cogs-dep exp-interest exp
=3018-1500-(6806-6682)-140=1254
=827.64/1254=6^%
d)Interest burden ratio= pretax income/EBIT
EBIT= 1254+int exp
=1254+140=1394
Interest burden=1254/1394=0.90
e)Asset turnover rato= Total sales/Avg total assets
Total assets year 2=(1340-6806+284+1074+10260)=6152
Year 1=(880-6682+178+1076+10000)=5452
=3018/((6152+5452)/2)=0.52

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.