Question

CALCULATOR PRINTER VERSION BACK NEXT Exercise 18-10 Suppose selected comparative statement data for the giant bookseller Barnes Noble are presented here. All balance sheet data are of the end of the fiscal year in million). 2020 $5,600 3,696 $5,500 3,833 Net sales Cost of goods sold Net income Accounts receivable Inventory Total assets Total common stockholders' equity 1,206 3,140 117 1,229 3,860 1,005 Compute the following ratios for 2020. (Round asset turnover to 2 decim (a) Pront margin (b) Asset turnover (c) Return on assets (d) Return on common stockholders' equity (e) Gross profit rate Wersion 4.24.162 soos Inc Policy 2000-2019 John Wiley & Sons, Inc. All Rights Reserved. A Division of John W sy

Answer 1

Answer-a)- Profit margin = (Net income/Net sales)*100

= ($84/$5600)*100

= 1.5%

b)- Asset turnover =Net sales/Average Total assets

=$5600/($3860+$3150)/2

=$5600/$3500

=1.6 times

c)- Return on assets =(Net income/Average total assets)*100

={$84/($3860+$3150)/2}*100

=($84/$3500)*100

= 2.4%

d)- Return on common stockholder’s equity=Net income-Preferred dividends/Average common stockholder’s equity

= {$84/($1005+$852)/2}

= ($84/$928.5)*100

= 9.0%

e)- Gross profit rate = (Gross profit/Net Sales)*100

= ($1904/$5600)*100

= 34%

Where- Gross profit = Sales-Cost of goods sold

= $5600-$3696

= $1904