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The following income statement and balance sheets for Laser World are provided

The following income statement and balance sheets for Laser World are provided:

 

Laser World

Income Statement

For the year-ended December 31, 2015

 

 

 

 

 

Sales revenue

 

 

$ 2,200,000

 

Cost of goods sold

 

 

1,500,000

 

Gross profit

 

 

700,000

 

Expenses:

 

 

 

 

Operating expenses

 

 

350,000

 

Depreciation expense

 

 

70,000

 

Loss on sale of land

 

 

5,000

 

Interest expense

 

 

25,000

 

Income tax expense

 

 

60,000

 

Total expenses

 

 

510,000

 

Net income

 

 

$    190,000   

 

 

 

 

 

 

         

 

Laser World

Balance Sheet

December 31

 

Assets

 

2015

 

 

2014

 

 

Current assets:

 

 

 

 

 

Cash

$ 120,000

 

$ 112,000

 

 

Accounts receivable

90,000

 

70,000

 

 

Inventory

120,000

 

100,000

 

 

Prepaid rent

10,000

 

10,000

 

 

Long-term assets:

 

 

 

 

 

Land

260,000

 

200,000

 

 

Equipment

350,000

 

210,000

 

 

Accumulated depreciation

(70,000)

 

(42,000)

 

 

Total assets

$ 880,000

 

$ 660,000

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

Current liabilities:

 

 

 

 

 

Accounts payable

$   55,000

 

$   75,000

 

 

Interest payable

8,000

 

7,000

 

 

Income tax payable

15,000

 

12,000

 

 

Long-term liabilities:

 

 

 

 

 

Notes payable

400,000

 

300,000

 

 

Stockholders’ equity:

 

 

 

 

 

Common stock

200,000

 

200,000

 

 

Retained earnings

202,000

 

66,000

 

 

Total liabilities and equity

$ 880,000

 

$ 660,000

 

 

 

 

 

 

 

 

           

 

Earnings per share for the year-ended December 31, 2015, is $1.90. The closing stock price on December 31, 2015, is $30.40.

 

Calculate the following profitability ratios for 2015:

1. Gross profit ratio

4. Asset turnover

2. Return on assets

5. Return on equity

3. Profit margin

6. Price-earnings ratio

Jan 27 2020 Read more Less More

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