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Ratios Analyzing Firm Profitability The following information is available for Crest Company: Annual Data 2013 2012...

Ratios Analyzing Firm Profitability
The following information is available for Crest Company:

Annual Data 2013 2012
Sales revenue $6,800,000 $6,000,000
Cost of goods sold 3,806,400 3,720,000
Net income 288,800 264,000
Year-End Data Dec. 31, 2013 Dec. 31, 2012
Total assets $2,880,000 $2,360,000
Common stockholders' equity 1,888,000 1,800,000


Calculate the following ratios for 2013:

Round answers to one decimal place, unless otherwise noted.

a. Gross profit percentage

Answer%


b. Return on sales

Answer%


c. Asset turnover (Round answer to two decimal places.)

Answer



d. Return on assets

Answer%


e. Return on common stockholders' equity (Crest Company declared and paid preferred stock dividends of $28,000 in 2013.)

Answer%

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Answer #1

a) Gross profit percentage = Gross profit*100/Net sales

= 2993600*100/6800000

Gross profit percentage = 44.0%

b) Return on sales = Net income*100/Net sales

= 2704800*100/6800000

Return on sale = 40.0%

c) Assets turnover = Sales/Average assets

= 6800000/2620000

Assets turnover = 2.60

d) Return on assets = Net income*100/Average assets

= 2704800*100/2620000

Return on assets = 103.2%

e) Return on common stockholder's equity = Net income*100/Average equity

= (2704800-28000)*100/1844000

Return on common stockholder's equity = 145.2%

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