Question

Ratio proficiency McDougal​ Printing, Inc., had sales totaling $34,000,000 in fiscal year 2019. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a​ 365-day year.

Ratio proficiency McDougal Printing, Inc., had sales totaling $34,000,000 in fiscal year 2019. Some ratios for the company are listed below. Use this information to determine the dollar values of various income statement and balance sheet accounts as requested. Assume a 365-day year. McDougal Printing, Inc. Calculate values for the following: Year Ended December 31, 2019 a. Gross profits Sales $34,000,000 b. Cost of goods sold c. Operating profits Gross profit margin 82% d. Operating expenses Operating profit margin 39% e. Earnings available for common stockholders Net profit margin 9% f. Total assets Return on total assets 16.2% g. Total common stock equity Return on common equity 22% h. Accounts receivable Total asset turnover 1.8 Average collection period 64.4 days

Answer 1

Answer to Part a.
Gross Profit Margin = Gross Profit / Sales * 100
82 = Gross Profit / $34,000,000 / 100
Gross Profit = $27,880,000

Answer to Part b.
Gross Profit = Sales - Cost of Goods Sold
$27,880,000 = $34,000,000 - Cost of Goods Sold
Cost of Goods Sold = $6,120,000

Answer to Part c.
Operating Profit Margin = Operating Profit / Sales * 100
39 = Operating Profit / $34,000,000 * 100
Operating Profit = $13,260,000

Answer to Part d.
Operating Profit = Gross Profit – Operating Expenses
$13,260,000 = $27,880,000 - Operating Expenses
Operating Expenses = $14,620,000

Answer to Part e.
Net Profit Margin = Net Profit / Sales * 100
9 = Net Profit / $34,000,000 * 100
Net Profit = $3,060,000

Net Profit = Earnings available for Common Stockholders = $3,060,000

Answer to Part f.
Total Assets Turnover = Sales / Total Assets
1.8 = $34,000,000 / Total Assets
Total Assets = $18,888,889

Answer to Part g.
Return on Common Equity = Net Income / Total Common Stock Equity * 1000
22 = $3,060,000 / Total Common Stock Equity * 100
Total Common Stock Equity = $13,909,091

Answer to Part h.
Average Collection period = 365 * Accounts Receivable / Sales
64.4 = 365 * Accounts Receivable / $34,000,000
Accounts Receivable = $5,998,904