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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.

       

 

Abhinav 04-Dec-2019

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