Question

Maggie’s Skunk Removal Corp.’s 2018 income statement listed net sales of $14.1 million, gross profit of $9.00 million, EBIT of $7.2 million, net income available to common stockholders of $4.8 million, and common stock dividends of $2.8 million. The 2018 year-end balance sheet listed total assets of $54.1 million and common stockholders' equity of $22.6 million with 2.0 million shares outstanding.
Calculate the gross profit margin. (Round your answer to 2 decimal places.)
Calculate the operating profit margin. (Round your answer to 2 decimal places.)
Calculate the profit margin. (Round your answer to 2 decimal places.)
Calculate the basic earnings power. (Round your answer to 2 decimal places.)
Calculate the return on assets. (Round your answer to 2 decimal places.)
Calculate the return on equity. (Round your answer to 2 decimal places.)
Calculate the dividend payout. (Round your answer to 2 decimal places.)

Answer 1

Answer:

The answer is shown below:

Explanation:

The computations are shown below:

1. Gross Profit margin in percentage is

= Gross profit ÷ Net sales × 100

= $9 million ÷  $14.1 million

= 63.83%

2. Net Profit margin percentage

= Net income available to common stockholders  ÷ Net sales × 100

= $4.8 million ÷ $14.1 million

= 34.04%

3. Operating Profit margin percentage is

= EBIT ÷ Net sales × 100

= $7.2 million ÷ $14.1 million

= 51.06%

Basic Earning Power in percentage

= EBIT ÷ Total Assets

= $7.2 million ÷ $54.1 million

= 13.31%

Return on assets is

= Net Income ÷ Average Assets

= $4.8 million ÷ $54.1 million

= 8.87%

Return on Equity is

= Net income ÷ common stockholders' equity

= $4.8 million ÷ $22.6 million

= 21.24%

And,

Dividend Payout ratio  is

= common stock dividends ÷ net income available to common stockholders

= $2.8 million ÷  $4.8 million

= 58.33%