Question

Financial Analysis Background The income statement for the All-In Bicycle Company, a producer of consumer bicycles, is shown below. All-In has total assets of $850 thousand, and its owner's equity is $645 thousand. Consolidated Earnings and Retained Earnings Year Ended December 31 2017 Net sales $1,285,000 Cost of goods sold $984,000 Gross profit $301,000 Total operating expenses expense $145,000 Interest expense $5,000 Net income before taxes $ 151,000 Federal taxes $17,200 Net Income $133,800 Net earnings per share $2.94 Task Calculate the following profitability ratios: profit margin, return on assets, and return on investment. Assume that the industry averages for these ratios are as follows: profit margin, 12 percent; return on assets, 18 percent; and return on equity, 25 percent. Evaluate All-In's profitability relative to the industry averages.

Answer 1

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