Question

Given the financial statements for Jones Corporation and Smith Corporation JONES CORPORATION Current Assets Liabilities Cash Accounts receivable nven $123,300 Accounts payable $176,000 89,600 183,600 56,800 Bonds payable (long term) Long-Term Assets Stockholders' Equity Gross fixed assets $554,000 152,300 $150,000 70,000 279,800 $765,400 Total labilities and equity $765,400 Common stock Less: Accumulated depreciation Net fixed assets Paid-in capital 401,700 Retained earnings Total assets Sales (on credit) Cost of goods sold Gross profit Selling and administrative $1,255,000 678,000 577,000 355,000 nse 59,400 $ 162,600 Depreciation expense Operating profit Interest expense Earnings before taxes Tax expense Net income $ 151,300 82,500 $ 68,800 Use net fixed assets in computing fixed asset turnover tIncludes $12,700 in lease payments. SMITH CORPORATION Current Assets Liabilities Cash Marketable securities Accounts receivable nven S 44,000 Accounts payable 7,900 73,700 77,500 Bonds payable (long term) 290,000 Long-Term Assets Stockholders' Equity Gross fixed assets $557,000 251,800 $75,000 30,000 29,600 508,300 Total liabilities and equity $508,300 Common stock Less: Accumulated depreciation Net fixed assets Paid-in capital 305,200 Retained earnings Total assets "Use net fixed assets in computing fixed asset turnover SMITH CORPORATION Sales (on credit) Cost of goods sold Gross profit Selling and administrative $1,430,000 919,000 511,000 299,000 nse 57,500 154,500 Depreciation expense Operating profit Interest expense Earnings before taxes Tax expense Net income $ 123,900 59,900

Answer 1

Solution:-

$\bg_green Note:-$As per HOMEWORKLIB RULES if more than four sub part is posted than we liable to answer only first four sub part.

1. Profit margin Ratio:-

	Jones Corp.		Smith Corp.
Profit margin	5.48	%	4.48	%

Explanation:-

$Profit\: Margin\: Ratio=\frac{Net\: profit}{Net\: sales}$

	Jones Corp.	Smith Corp.
Net profit (a)	68,800	64,000
Net sales (b)	1,255,000	1,430,000
Profit margin ratio (a) / (b)	5.48%	4.48%

2. Return on assets (Investment):-

	Jones Corp.		Smith Corp.
Return on assets (Investment)	7.50	%	8.42	%

Explanation:-

$Return\: on\: Assets=\frac{Net\: profit}{Total\: Assets}$

	Jones Corp.	Smith Corp.
Net profit (a)	68,800	64,000
Total Assets (Before taking accumulated depreciation) (b)	917,700	760,100
Return on Assets (a) / (b)	7.50%	8.42%

3. Return on Equity:-

	Jones Corp.		Smith Corp.
Return on Equity	13.77	%	47.55	%

Explanation:-

$Return\: on\: Assets=\frac{Net\: profit}{Shareholder's\: Equity}$

	Jones Corp.	Smith Corp.
Net profit (a)	68,800	64,000
Shareholder's Equity (b)	499,800	134,600
Return on Shareholder's equity (a) / (b)	13.77%	47.55%

4. Receivable turnover:-

	Jones Corp.		Smith Corp.
Receivable turnover	6.84	times	19.40	times

Explanation:-

$Receivable\: turnover=\frac{Net\: credit\: sales}{Accounts\: receivable}$

	Jones Corp.	Smith Corp.
Net Credit Sales (a)	1,255,000	1,430,000
Accounts Receivable (b)	183,600	73,700
Receivable turnover (a) / (b)	6.84 times	19.40 times

$\bg_green Note:-$As per HOMEWORKLIB RULES if more than four sub part is posted than we liable to answer only first four sub part.

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