Question

The Balance Sheet and the Income Statement for ABC Manufacturing Corporation are as follows:
DATA (All amounts in SAR unless otherwise indicated, all sales are on credit and no hard keys.)
Balance Sheet:

ABC Corporation Balance Sheet
	2019
Cash	310
Accounts receivable	685
Inventories	600
Other current assets	105
Total current assets	1,700
Gross fixed assets	3,750
Accumulated depreciation	-1,500
Net fixed assets	2,250
Total assets	3,950
LIABILITIES (DEBT) AND EQUITY
Accounts payable	350
Short-term notes payable	250
Total current liabilities	600
Long-term debt	950
Total liabilities	1,550
Common stock (par & paid in capital)	1,050
Retained earnings	1,475
Total common equity	2,400
Total liabilities and equity	3,950
ABC Corporation Income Statement	2019
Sales	6,000
Cost of goods sold	-3,700
Gross profits	2,300
Operating expenses:
Selling and G&A expenses	-820
Depreciation expenses	-340
Total operating expenses	-1,160
Operating income (earnings before interest and taxes)	1,140
Interest expense	-200
Earnings before taxes	940
Income taxes	-230
Net Income	710
Number of shares (thousands)	160
Dividends (thousands)	120
Market price per share	40
Calculate the following ratios:
Operating return on assets
Operating profit margin
Total asset turnover
Fixed asset turnover
Debt ratio
Times interest earned
Return on equity
Earnings per share
Dividends per share
Price/Earnings
Book value per share
Market/Book

Answer 1

Operating return on assets	=	Operating income / Total assets
Operating return on assets	=	1140/3950
Operating return on assets	=	28.86%
Operating Profit margin		=	Operating profit / Net Sales
Operating Profit margin		=	1140/6000
Operating Profit margin		=	19.00%
Total Assets Turnover		=	Net Sales / Total Assets
Total Assets Turnover		=	6000/3950
Total Assets Turnover		=	1.52
Fixed Assets Turnover		=	Net Sales / Fixed Assets
Fixed Assets Turnover		=	6000/2250
Fixed Assets Turnover		=	2.67
Debt Ratio			=	Total Debt / Total Assets
Debt Ratio			=	1550/3950
Debt Ratio			=	0.39
Times Interest earned		=	EBIT/ Interest
Times Interest earned		=	1140/200
Times Interest earned		=	5.7
Return on equity		=	Net income / Shareholders equity
Return on equity		=	Net income / (total assets - total liabilities)
Return on equity		=	710/(3950-1550)
Return on equity		=	29.58%
Earning per share		=	Net income / nos of shares
Earning per share		=	710000/160000
Earning per share		=	4.44	SAR
Dividends per share		=	Dividends / Nos of shares
Dividends per share		=	120000/160000
Dividends per share		=	0.75	SAR
Price to earning		=	Price per share / Earning per share
Price to earning		=	40/4.44
Price to earning		=	9.01
Book value per share		=	Shareholders equity / nos of shares
Book value per share		=	(total assets - total liabilities)/ nos of shares
Book value per share		=	(3950-1550)/160
Book value per share		=	15
Market to book		=	Market price per share / Book value per share
Market to book		=	40/15
Market to book		=	2.67