# income statement and ratios

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

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