Question

The comparative income statements and additional data for Harmon Decor, Inc., follow: (Click the icon to view the comparative income statements.) (Click the icon to view the additional data.) Read the requirement. Select the formula for each of the following component ratios, then calculate the ratios for 2018 and 2017. (Round ALL of your answers to three decimal places, X.XXX, and do not enter in percentage format. Ignore interest expense in your a Ratio Formula 2018 2017 ROS AT ROA ROE A Requirement i Data Table 1. For 2018 and 2017, calculate return on sales, asset turnover, return on assets (ROA), leverage, return on common stockholders' equity (ROE), gross profit percentage, operating income percentage, and earnings per share to measure the ability to earn profits for Harmon Decor, Inc. Perform a DuPont Analysis for ROA and ROE, and round each component ratio to three decimals places, for other ratio computations, round to two decimals. Did the company's operating performance improve or deteriorate during 2018? Print Done Harmon Decor, Inc. Comparative Income Statements Years Ended December 31, 2018 and 2017 2018 2017 Net sales $ 250,000 $ 199,000 Cost of goods sold 123,000 102,000 Gross profit 127,000 97,000 Selling and general expenses 55,000 51,000 Income from operations 72,000 46,000 14.000 Interest expense 18,000 Income before income tax 58,000 28,000 Income tax expense 20,000 10,000 $ 38,000 $ 18,000 Net income X © - Data Table Total assets. $ Common stockholders' equity ..........$ Preferred dividends ..........$ Average common shares outstanding during the year 2018 310,000 $ 196,000 $ 2,000 $ 2017 305,000 $ 194,000 $ 1,000 $ 2016 300,000 192,000 0 Print Done 15,000 14,000 13,000 Print Done Choo

Answer 1

Page: No Answer O ROS ROS - income from operations Net sales 2018, ROSE 2000 250,000 - = 0.288 2017, ROS = 46000 0 231 199,000 AT AT - Net sales verage assets = 250,000 ..250,000 307500 2018, AT 0.813 310,000 + 305000 2 ROA 2014, AT 199000 199000 = 0.658 305000 + 300,0007 302500 L . 2. J CROA - Rate of return on net sales x Asset furnover (67) CROS) 2018, ROA = 0.288 X0.813 3 0.234 2014, ROA = 0.231 X0658 = 0.158

Page No Leverage W Average total assets I 2018, Leverage = Average equity 310,000 + 305000 196000 + 194000 307500 195000 = 1.577 [ 305000 + 300,000 2017, Leverage = { [ 194000 + 1920007 302500 193000 = 1.567 ROEROE 80A x Leverage 2018, ROE = 1675.80.234 = 0.369 2017, ROE = 1.567 X 0,152 = 0.238 Ratio T formula 2018 2014 Ros income from operations / Net sales 028 8 0.231 | Net sales / Average asseto . 0.813 0.658 ROA - ROSX AT 0.234 0.152 - Average total assets / Average equily 1.547. 1:564 ROE ROAXL 0.369 10.238 АТ