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DochEvi [55]
3 years ago
5

Maggie’s Skunk Removal Corp.’s 2018 income statement listed net sales of $13.8 million, gross profit of $8.70 million, EBIT of $

6.9 million, net income available to common stockholders of $4.5 million, and common stock dividends of $2.5 million. The 2018 year-end balance sheet listed total assets of $53.8 million and common stockholders' equity of $22.3 million with 2.0 million shares outstanding.
1. Calculate the profit margin.
2. Calculate the basic earnings power.
3. Calculate the return on assets.
4. Calculate the return on equity.
5. Calculate the dividend payout.
Business
1 answer:
Margarita [4]3 years ago
5 0

Answer: See explanation

Explanation:

1. Calculate the profit margin

Profit Margin = (Net Income/Net Sales) × 100

Profit Margin = (4,500,000/13,800,000) × 100

Profit Margin = 3.26 × 100

Profit margin = 32.6%

2. Calculate the basic earnings power.

Gross Profit Margin:

= Gross Profit/Net Sales × 100

= (8,700,000/13,800,000) × 100

= 6.304 × 100

= 63.04%

3. Calculate the return on assets.

Return on assets= Net income/Total asset

= 4,500,000/53,800,000

= 0.0836

= 8.36%

4. Calculate the return on equity.

Return on equity = Net income/Equity

= 4,500,000/22,300,000

= 0.2017

= 20.17%

5. Calculate the dividend payout.

Dividend payout = Dividend/Net income

= 2,500,000/4,500,000

= 0.556

= 55.6%

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julia-pushkina [17]

Answer:

10.67%

Explanation:

Gecko Company

Gecko = Expected Earnings growth rate = 8% annually

As there are no Capital gains tax, thus after Tax returns = Pretax returns

= 8%

Expected Dividend yield of Gordon = 5%

After tax returns = 5(1-.25)

=5(0.75)

= 3.75%

Assuming the pay out ratio = 100%

Gordon’s required pretax return = 8/ (1-.25)

=8/0.75

= 10.67%

At pretax return of 10.67% on Gordon the after tax returns on both the stocks are equal.

5 0
3 years ago
In 2021, CPS Company changed its method of valuing inventory from the FIFO method to the average cost method. At December 31, 20
alekssr [168]

Answer:

Entry to record adjustment:

COGS Dr $9.4m

         Inventory Cr $9.4m

Explanation:

The question relates to a change in accounting policy. According to IAS 8 (changes in accounting policy and estimate), a change in accounting policy is to be reflected retrospectively and prospectively, which means any changes should be implemented by bringing changes in the past records. Since CPS company has been using FIFO method, the inventory has been overstated in the financial statements. A shift to AVCO has resulted in a decrease in inventory value.

The value of inventory has to be reduced as a result of change in accounting policy (i.e $38m - $28.6m). This is the closing inventory so a reduction in the value of closing inventory results in an increase in cost of goods sold (COGS), therefore, the adjusting entry will be aimed at reducing inventory and increasing cost of goods sold, see as follows:

Entry:

COGS Dr $9.4m

         Inventory Cr $9.4m

8 0
3 years ago
Minden Company introduced a new product last year for which it is trying to find an optimal selling price. Marketing studies sug
wlad13 [49]

Answer:

The present yearly net operating income or loss is  - $90,000

Explanation:

The computation of present yearly net operating income or loss is shown below:

Net income / Net loss = Sales - Variable cost - Fixed cost

The sales - variable cost is equal to contribution

Than, Contribution - fixed cost = net income

where,

Sales = Present Sales volume × Selling price

         = 15,000 × $70

         = $1,050,000

Variable cost = Present volume × Variable cost per unit

                     = 15,000 × $40

                     = $600,000

And, fixed cost = $540,000

So, net income / loss = $1,050,000 - $600,000 - $540,000

                                   = - $90,000

Hence, the amount shows negative which means the company has suffered a loss of $90,000

Thus, the present yearly net operating loss is  - $90,000

8 0
3 years ago
Note how these emerging technologies are impacting organizations and what organizations can to do to reduce the burden of digita
Rashid [163]

The correct answer to this open question is the following.

You did not attach any text, article, or particular reference to answer this question. So we assume you are talking in general terms.

So being that the case, we can comment on the following.

It is true that emerging technologies are impacting organizations. Some businesses and organizations have been overwhelmed by technological advances. We are talking about new technologies that are transforming the workplace such as biometrics, analytics, robotics, big data, or artificial intelligence.

What organizations can do to reduce the burden of digitalization is having a gradual transformation. Not a sudden or abrupt change. A step by stape process is highly recommended. But procrastination at all. The digital transformation should start now.

It has to start with a process of training to make employees aware of the necessity of change.

6 0
3 years ago
Ryan, the owner of Home Value supermarket chain, wants to terminate a contract with a supplier. During the tenure of the contrac
Basile [38]

Answer:

Ryan takes the supplier representatives out for lunch and thanks them for being such great friends.

Explanation:

Ryan taking the supplier representatives out for lunch and thanking them for being such great friends is a less-than straightforward way of saying no and ending the working relationship.

From the supplier's perspective, Ryan taking the time to take them out on a lunch would suggest he's trying to show gratitude, so as to foster their existing business relationships.

On the other hand, coming to realize that it was his way of saying no and ending the working relationship between them would make the supplier representatives disappointed and making Ryan look less-than straightforward.

5 0
3 years ago
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