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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

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