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    Computation of ratios, profit margins and earnings per shares

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    Slaubaugh Corporation's most recent balance sheet and income statement appear below:
    Statement of Financial Position
    December 31, Year 2 and Year 1
    (in thousands of dollars)

    Year 2 Year 1
    Assets
    Current assets:
    Cash.................................................................... $ 100 $ 140
    Accounts receivable.............................................. 160 180
    Inventory.............................................................. 210 190
    Prepaid expenses.................................................. 40 50
    Total current assets.................................................. 510 560
    Plant and equipment, net.......................................... 860 820
    Total assets............................................................. $1,370 $1,380

    Liabilities and Stockholders' Equity
    Current liabilities:
    Accounts payable................................................. $ 160 $ 180
    Accrued liabilities.................................................. 80 80
    Notes payable, short term..................................... 80 80
    Total current liabilities.............................................. 320 340
    Bonds payable......................................................... 70 100
    Total liabilities.......................................................... 390 440
    Stockholders' equity:
    Preferred stock, $100 par value, 10%................... 200 200
    Common stock, $1 par value................................ 200 200
    Additional paid-in capital-common stock.............. 130 130
    Retained earnings.................................................. 450 410
    Total stockholders' equity........................................ 980 940
    Total liabilities & stockholders' equity...................... $1,370 $1,380

    Income Statement
    For the Year Ended December 31, Year 2
    (in thousands of dollars)

    Sales (all on account)............................................... $1,350
    Cost of goods sold.................................................. 820
    Gross margin........................................................... 530
    Selling and administrative expense............................ 399
    Net operating income............................................... 131
    Interest expense....................................................... 17
    Net income before taxes.......................................... 114
    Income taxes (30%)................................................ 34
    Net income.............................................................. $ 80

    Dividends on common stock during Year 2 totaled $20 thousand. Dividends on preferred stock totaled $20 thousand. The market price of common stock at the end of Year 2 was $2.88 per share.
    Required:
    Compute the following for Year 2:
    a. Profit Margin percentage
    b. Earnings per share (of common stock).
    c. Price-earnings ratio.
    d. Dividend payout ratio.
    e. Dividend yield ratio.
    f. Return on total assets.
    g. Return on common stockholders' equity.
    h. Book value per share.

    © BrainMass Inc. brainmass.com June 3, 2020, 10:56 pm ad1c9bdddf
    https://brainmass.com/business/accounting/computation-ratios-profit-margins-earnings-per-shares-256965

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    Solution Summary

    The solution contains computation of following ratios:Profit Margin percentage, Earnings per share, Price-earnings ratio, Dividend payout ratio, Dividend yield ratio,Return on total assets, Return on common stockholders' equity, Book value per share.

    $2.19

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