Show all of your work and formulas. 2) Use the financial statements provided to answer th

Show all of your work and formulas. 2) Use the financial statements provided to answer th

 Show all of your work and formulas. 2) Use the financial statements provided to answer the questions

1. The firm's profit margin ratio for 2015 is _____ percent.

2. The firm's return on equity ratio for 2015 is _____.

3. The firm’s return on assets ratio for 2015 is _____.

4. The firm's P/E ratio for 2015 is _____.

The financial statements of Addison Service Company are given below:

Addison Service Company

Income Statement (2015)

Sales

$8,000,000

Cost of goods sold

5,260,000

Gross profit

2,740,000

Selling and administrative expenses

Depreciation

1,350,000

150,000

Operating profit

1,240,000

Interest expenses

140,000

Income before tax

1,100,000

Tax expense

440,000

Net income

$660,000

Balance Sheet

2015

2014

Cash

$200,000

$50,000

Accounts receivable

1,200,000

950,000

Inventory

1,840,000

1,500,000

Total current assets

3,240,000

2,500,000

Fixed assets

3,200,000

3,000,000

Total assets

$6,440,000

$5,500,000

Accounts payable

800,000

720,000

Bank loan

600,000

100,000

Total current liabilities

1,400,000

820,000

Bonds payable

900,000

1,000,000

Total liabilities

2,300,000

1,820,000

Common stock (130,000 shares)

300,000

300,000

Retained earnings

3,840,000

3,380,000

Total liabilities & equity

$6,440,000

$5,500,000

Note: The common shares are trading in the stock market for $40 each.

 

Addison Service Company
Income Statement (2015)
Sales	$8,000,000
Cost of goods sold	5,260,000
Gross profit	2,740,000
Selling and administrative expenses Depreciation	1,350,000 150,000
Operating profit	1,240,000
Interest expenses	140,000
Income before tax	1,100,000
Tax expense	440,000
Net income	$660,000
Balance Sheet
	2015	2014
Cash	$200,000	$50,000
Accounts receivable	1,200,000	950,000
Inventory	1,840,000	1,500,000
Total current assets	3,240,000	2,500,000
Fixed assets	3,200,000	3,000,000
Total assets	$6,440,000	$5,500,000
Accounts payable	800,000	720,000
Bank loan	600,000	100,000
Total current liabilities	1,400,000	820,000
Bonds payable	900,000	1,000,000
Total liabilities	2,300,000	1,820,000
Common stock (130,000 shares)	300,000	300,000
Retained earnings	3,840,000	3,380,000
Total liabilities & equity	$6,440,000	$5,500,000
Note: The common shares are trading in the stock market for $40 each.