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    Common Size and Ratios

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    I have to create a common size income statement and compute ratios. My text is not very helpful.

    Common size statements; profitability, efficiency, and market value ratios Cotter Company's balance sheet at December 31, 2005 and income statement for the year ended December 31, 2005 are shown here:

    See attachment.

    Common size statements; profitability, efficiency, and market value ratios Cotter Company's balance sheet at December 31, 2005 and income statement for the year ended December 31, 2005 are shown here:

    Cotter Company
    BalanceSheet
    December 31, 2005

    Assets
    Current assets $35,000
    Market securities 60,000
    Accounts receivable 45,000
    Inventories 215,000
    Prepaid expenses 45,000
    Total current assets 400,000
    Property, plant, and equipment, net 1,300,000
    Total assets $1,700,000

    Liabilities and Stockholder's Equity
    Liabilities:
    Current liabilities $105,000
    Long-term debt 420,000
    Total liabilities 525,000
    Stockholders' equity
    Common stock, $15 par value $150,000
    Paid-in capital in excess of par 300,000
    Retained earnings 725,000
    Total stockholders' equity 1,175,000
    Total liabilities and stockholder's equity $1,700,000

    Cotter Company
    Income Statement
    For the Year Ended December 31, 2005
    Sales $2,500,000
    Cost of sales 975,000
    Gross profit $1,525,000
    Selling, general, and administrative expenses 945,000
    Operating profit 580,000
    Internet expense 38,000
    Pretax income 542,000
    Income taxes 216,800
    Net income 325,200

    a. Present the income statement and balance sheet in (monetary and) common size form.
    b. Cotter Company's common stock price per share at the end of 2005 was $125, and dividends per share were $3.45. Compute the following ratios:
    ? Return on assets
    ? Return on common equity
    ? Basic earnings per share
    ? Dividend yield ratio
    ? Gross profit margin
    ? Operating profit margin
    ? Net profit margin
    ? Price earnings ratio
    ? Market to book value

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    https://brainmass.com/business/financial-statements/common-size-and-ratios-168446

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    Common size statements; profitability, efficiency, and market value ratios Cotter Company's balance sheet at December 31, 2005 and income statement for the year ended December 31, 2005 are shown here:

    Cotter Company
    BalanceSheet
    December 31, 2005

    Assets
    Current assets $35,000
    Market securities 60,000
    Accounts receivable 45,000
    Inventories 215,000
    Prepaid expenses 45,000
    Total current assets 400,000
    Property, plant, and equipment, net 1,300,000
    Total assets $1,700,000

    Liabilities and Stockholder's Equity
    Liabilities:
    Current liabilities $105,000
    Long-term debt 420,000
    Total liabilities 525,000
    Stockholders' equity
    Common stock, $15 par value $150,000
    Paid-in capital in excess of par 300,000
    Retained earnings 725,000
    Total stockholders' equity 1,175,000
    Total liabilities and stockholder's equity $1,700,000

    Cotter Company
    Income Statement
    For the Year Ended December 31, 2005
    Sales $2,500,000
    Cost of sales 975,000
    Gross profit $1,525,000
    Selling, general, and administrative expenses ...

    Solution Summary

    The solution explains how to prepare common size financial statements and calculate the given profitability, efficiency and market value ratios.

    $2.19

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