Question

Maggie's Skunk Removal Corp's 2018 income statement listed net sales of $143 million. gross profit of $950 million, EBIT of $74 to common stockholders of $5.0 million, and common stock dividends of $3.0 million. The 2018 year end s outstanding million, net income available to common stockholders of $50 million, and common st balance sheet listed total assets of $54.3 million and common stockholders' equity of $22.8 million with 2 0 million share Calculate the gross profit margin. (Round your answer to 2 decimal places.) profit margin Calculate the operating profit margin. (Round your answer to 2 decimal places.) rating profit margin Calculate the profit margin (Round your answer to 2 decimal places)

Answer 1

Answer a.

Gross Profit Margin = Gross Profit / Net Sales
Gross Profit Margin = $9.50 million / $14.30 million
Gross Profit Margin = 0.6643 or 66.43%

Answer b.

Operating Profit Margin = EBIT / Net Sales
Operating Profit Margin = $7.40 million / $14.30 million
Operating Profit Margin = 0.5175 or 51.75%

Answer c.

Profit Margin = Net Income available to Common Stockholders / Net Sales
Profit Margin = $5.00 million / $14.30 million
Profit Margin = 0.3497 or 34.97%

Answer d.

Basic Earnings Power = EBIT / Total Assets
Basic Earnings Power = $7.40 million / $54.30 million
Basic Earnings Power = 0.1363 or 13.63%

Answer e.

Return on Assets = Net Income available to Common Stockholders / Total Assets
Return on Assets = $5.00 million / $54.30 million
Return on Assets = 0.0921 or 9.21%

Answer f.

Return on Equity = Net Income available to Common Stockholders / Common Stockholders’ Equity
Return on Equity = $5.00 million / $22.80 million
Return on Equity = 0.2193 or 21.93%

Answer g.

Dividend Payout = Common Stock Dividends / Net Income available to Common Stockholders
Dividend Payout = $3.00 million / $5.00 million
Dividend Payout = 0.60 or 60.00%