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    income statement and ratios

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    21. Follies bookstore, the only bookstore close to campus, had a net income in 2003 of $90,000. Here are some of the ratios from the annual report.

    Profit Margin: 12%
    Return on Investment: 20%
    Debt to Asset Ratio: 55%

    Using these ratios, calculate the following for Follies Bookstore:

    a. Sales

    b. Total Assets

    c. Total Asset Turnover

    d. Total Debt

    e. Stockholder's Equity

    f. Return on Equity

    22. Electro Wizard Company produces a popular video game called Destructo, which sells for $32. Last year Electro Wizard sold 50,000 Destructo games each of which costs $6 to produce. Electro Wizard incurred selling and administrative expenses of $80,000 and depreciation expense of $10,000. In addition, Electro Wizard has a $100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding.

    Prepare an income statement for Electro Wizard in good form (includes EPS)

    Electro Wizard Company
    Income Statement
    For year ending 12/31/20..

    Sales
    Less COGS
    Gross Profit
    Less Operating Expenses

    Operating Profit (EBIT)
    Less Interest Expense
    Earnings Before Taxes
    Less Taxes
    Net Income

    Common Shares
    Earnings Per Share

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    https://brainmass.com/business/flow-to-equity/income-statement-and-ratios-23907

    Solution Preview

    21. Follies bookstore, the only bookstore close to campus, had a net income in 2003 of $90,000. Here are some of the ratios from the annual report.

    Profit Margin: 12%
    Return on Investment: 20%
    Debt to Asset Ratio: 55%

    Using these ratios, calculate the following for Follies Bookstore:

    a. Sales 90,000 / .12 = $750,000

    b. Total Assets 90,000 / .20 = $450,000

    c. Total Asset Turnover ...

    Solution Summary

    a. Sales

    b. Total Assets

    c. Total Asset Turnover

    d. Total Debt

    e. Stockholder's Equity

    f. Return on Equity

    $2.19

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