Home / Questions / 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.
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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. |
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