Question

The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: ($ in thousands) 2021 2020 $6,500 450 $5,500 150 Income statement information Net sales Net income Balance sheet information Current assets Property, plant, and equipment (net) Total assets Current liabilities Long-term liabilities Common stock Retained earnings Liabilities and shareholders' equity $ 930 2,270 $3,200 $1,670 880 300 350 $3,200 $ 880 1,920 $2,800 $1,390 880 300 230 $2,800 Required: 1. Determine the following ratios for 2021: (Round your percentage answers to 1 decimal place.) 2. Determine the amount of dividends paid to shareholders during 2021. (Enter your answers in whole dollars, not in thousands. For example, $150,000 rather than 150.) 1a. Profit margin on sales 1b. Return on assets 10. Return on equity 2. Dividends paid

Answer 1

1a.

Profit margin on sales = Net Income / Net Sales

= 450/6,500

= 6.9%

1b.

Average total assets = ( Beginning assets + Ending Assets)/2

= ( 2,800+3,200)/2

= $3,000 thousands

Return on assets = Net Income/Average total assets

= 450/3,000

= 15%

1c.

Beginning equity = Beginning common stock + Beginning retained earnings

= 300+230

= $530 thousands

Ending equity = Ending common stock + ending retained earnings

= 300+350

= $650 thousands

Average equity = ( Beginning equity + Ending equity)/2

= (530+650)/2

= $590 thousands

Return on equity = Net Income/Average equity

= 450/590

= 76.27%

2.

Dividend paid = Retained earnings, beginnings + Net Income - retained earnings, ending

= 230,000+450,000-350,000

= $330,000

1a.	Profit margin on sales	6.9%	%
1b.	Return on assets	15%	%
1c.	Return on equity	76.27%	%
2.	Dividend paid	$330,000

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