Question

Condensed balance sheet and income statement data for Jergan Corporation are presented here. Jergan Corporation Balance Sheets December 31 2019 2020 2018 $29,100 $17,400 $17,800 Cash Accounts receivable (net) 50,000 44,700 47,500 Other current assets 90,100 95,700 63,500 Investments 70,600 44,000 54,500 Plant and equipment (net) 500,500 370,700 358,200 $724,200 $599,100 $531,000 Current liabilities $85,000 $80,500 $69,100 144,900 Long-term debt 84,200 49,500 Common stock, $10 par 342,000 311,000 299,000 Retained earnings 152,300 123,400 113,400 $724,200 $599,100 $531,000

Answer 1

Answer-

	2019	2020
(1) Profit Margin	10% Profit margin= Net Income / Net Sales *100 57,440/ 574,400*100= 10%	13% Profit margin= Net Income / Net Sales *100 90,623/ 697,100*100= 13%
(2) Gross Profit Rate	35.50% Gross Profit Rate= Gross Profit / Net Sales *100 203,900/ 574,400 *100= 35.50%	39.11% Gross Profit Rate= Gross Profit / Net Sales *100 272,700/ 697,100*100= 39.12%
(3) Assets Turnover	1.02 times Asset Turnover Ratio= Total Sales/ Average Total Assets 574,400/ 565,050= 1.02 times Total Average Assets= 599,100+531,000/2= 565,050	1.05 times Asset Turnover Ratio= Total Sales/ Average Total Assets 697,100/ 661,650= 1.05 times Total Average Assets= 724,200+599,100= 661,650
(4) Earnings Per Share	$1.88 Earnings Per Share= (Net income after tax - Preferred stock dividends) ÷ Average number of common shares outstanding 57,440/ 30,500= $1.88 Average number of common shares= 31,100+29,900/2 = 30,500	$2.78 Earnings Per Share= (Net income after tax - Preferred stock dividends) ÷ Average number of common shares outstanding 90623/ 32,650= $2.78 Average number of common shares=34,200+31,100/ 2= 32,650
(5) Price Earning Ratio	3.99 or Approx. 4 times Price Earning Ratio= Market Price per share/ Earnings per share 7.50/ 1.88= 3.99 or Approx. 4 times	3.06 times Price Earning Ratio= Market Price per share/ Earnings per share 8.50/ 2.78= 3.06 times
(6) Dividend Payout Ratio	82.59% Dividend Payout Ratio= Dividend Paid/ Net Income 47,440/57,440*100= 82.59% Dividend Paid= Beginning Retained Earnings + Net Income - Ending Retained Earnings 113,400+57,440-123,400= 47,440	68.11% Dividend Payout Ratio= Dividend Paid/ Net Income 61,723/ 90,623*100= 68.11% Dividend Paid= Beginning Retained Earnings + Net Income-Ending Retained Earnings 123,400+90,623-152,300= 61,723
(7) Debt to assets ratio	27.49% Debt to Assets Ratio= Total Debt/ Total Assets 80,500+84,200/599,100*100= 27.49%	31.75% Debt to Assets Ratio=Total Debt/ Total Assets 85,000+144,900/ 724,200*100 = 31.75%

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