1Data Table Mariner, Inc. Comparative Income Statement Years Ended December 31,

Question

1Data Table Mariner, Inc. Comparative Income Statement Years Ended December 31, 2017 and 2016 2017 2016 2015 Dollars in thousands Net Sales Cost of Goods Sold Selling and Administrative Expenses Interest Expense Income Tax Expense Net Income Additional data Total Assets Common Stockholders' Equity Preferred Dividends Common Shares Outstanding During the Year $ 186,000 $ 157,000 95,000 83,000 48,500 42,000 9,000 9,500 12,500 11,500 $ 21,000 $ 11,000 $ 202,000 $ 190,000 $ 167,000 94,000 87,000 77,500 3,000 15,000 15,000 10,000 3,000

Explanation / Answer

1) Profit margin ratio = Net income / Net sales

Profit margin ratio for 2017 = 21,000 / 186,000

= 0.1129

= 1.1% (one tenth of 11.29%)

Profit margin ratio for 2016 = 11,000 / 157,000

= 0.07

= 0.7% (one tenth of 7% )

2) Rate of return on total assets = Net profit + Interest + tax/ Total asset

for 2017:

Rate of return on total asset = 21,000 + 9,000 + 12,500 / 202,000

= 0.2104

= 21.04%

= 2.1%(one tenth of %)

for 2016:

rate of return on total asset = 11,000 + 9,500 + 11,500/ 190,000

= 0.1684

= 16.84%

= 1.7% (one thenth of %)

3) Asset turnover ratio = Sales / total asset

for 2017:

Asset turnover ratio = 186,000 / 202,000

= 0.9208

= 0.92

For 2016:

Asset turnover ratio = 157,000 / 190,000

= 0.8263

= 0.83

4) Rate of return on common stockholder's equity = (Net income - prefered dividend) / Common stockholder's equity

for 2017:

Rate of return on common stockholder's equity = (21,000 - 3,000) / 94,000

= 1.9%

for 2016:

Rate of return on common stockholder's equity = (11,000 - 3,000) / 87,000

= 0.9%

5) EPS (Earning per share) = (Net Income - Dividends on Preferred Stock) / Average Outstanding Shares

for 2017:

EPS = (21,000 - 3,000) / 15,000

= 1.2

for 2016:

EPS = (11,000 - 3,000) / 15,000

= 0.53

6) Dividend payout ratio = Dividend per share for common stock / Earning per share

Dividend per share for common stock = $0.73 per share

EPS in 2017 = 1.2

Dividend payout ratio = 0.73 / 1.2

= 0.6083

= 60.83%

7 ) Operating performance is defined as Net sales divided by Net fixed assets

Operating performance in 2016:

= 157,000 / 190,000

= 0.83

Operating performance in 2017:

= 186,000 / 202,000

= 0.92

Operating performance in 2017 is greater than that of in 2016

i.e It's operating performance improved during 2017

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