Question

260 The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020: ($ in thousands) 2021 2020 Income statement information Net sales $5,500 $4,500 Net income 130 Balance sheet information Current assets $ 830 $ 780 Property, plant, and equipment (net) 1,370 1,020 Total assets $2,200 $1,800 Current liabilities $ 540 $ 190 Long-term liabilities 780 780 Common stock 700 700 Retained earnings 180 130 Liabilities and shareholders' equity $2,200 $1,800 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 to. Return on equity 2 Dividends paid %

Answer 1

1a. Profit margin on sales = Net income / Sales

= 260/5500 = 4.7%

1b. Return on assets = net income / average total assets

= 260/ (2200+1800) /2

= 13.0%

1c. Return on equity = net income / average equity

= 260 / (700+180+700+130) /2

= 30.4%

2. Dividend paid = beginning retained earnings + net income - ending retained earnings

= 130000+260000-180000

= $210,000