Answer:
1a. Profit margin on sales 3.46%
1b. Return on assets 10%
1c. Return on equity 34.29%
2. Dividend paid $130,000
Explanation:
1a. Calculation to determine the Profit margin on sales
Using this formula
Profit margin on sales = Net Income / Net Sales
Let plug in the formula
Profit margin on sales = 180/5200
Profit margin on sales = 3.46%
1b. Calculation to determine Return on assets
First step is to calculate the Average total assets using this formula
Average total assets = ( Beginning assets + Ending Assets)/2
Let plug in the formula
Average total assets = = ( 1,700+1,900)/2
Average total assets = $1,800 thousands
Now let calculate the Return on assets using this formula
Return on assets = Net Income/Average total assets
Let plug in the formula
Return on assets = 180/1,800
Return on assets = 10%
1c Calculation to determine the Return on
shareholders’ equity
First step is to calculate the Beginning equity using this formula
Beginning equity = Beginning Paid-in capital + Beginning retained earnings
Let plug in the formula
Beginning equity= 400+100
Beginning equity= $500 thousands
Second step is to calculate the Ending equity using this formula
Ending equity = Ending Paid-in capital + ending retained earnings
Let plug in the formula
Ending equity = 400+150
Ending equity = $550 thousands
Third step is to calculate Average equity using this formula
Average equity = ( Beginning equity + Ending equity)/2
Let plug in the formula
Average equity= (500+550)/2
Average equity= $525 thousands
Now let calculate Return on equity using this formula
Return on equity = Net Income/Average equity
Let plug in the formula
Return on equity= 180/525
Return on equity= 34.29%
2. Calculation to Determine the amount of dividends paid to shareholders during 2018
Using this formula
Dividend paid = Retained earnings, beginnings + Net Income - retained earnings, ending
Let plug in the formula
Dividend paid=$100,000+$180,000-$150,000
Dividend paid= $130,000
Therefore the amount of dividends paid to shareholders during 2018 is $130,000
