Question

Below is selected financial data on Peter Parker Insect Control Company. Net profit margin: 8.6% COGS...

Below is selected financial data on Peter Parker Insect Control Company.

Net profit margin: 8.6%

COGS $3,700,000

Addition to retained earnings: $115,000

Current ratio: 2.5

Price-earnings ratio: 15.2

Current liabilities: $400,000

Fixed asset turnover: 1.5

Gross margin: 26%

Equity multiplier: 1.75

Common shares:                         650,000

Determine the following (show all calculations):

a. Fixed assets (2 points) - round to nearest $

b. Total assets (2 points) - round to nearest $

c. Total liabilities (2 points) - round to nearest $

d. Return on equity (2 points) - use 2 decimals

e. Share price (2 points) - use 2 decimals

Homework Answers

Answer #1

a) Fixed assets turnover = Sales / Fixed Assets

1.5 = 5,000,000 / Fixed Assets

Fixed Assets  = 5000000/1.5 = $3333333

Calculation of sales : Since Gross profit margin is 26% Hence COGS is 74%.

Therefore sales = COGS/COGS Ratio

= 3700000/74% = $5,000,000

b ) Total Assets = Fixed Assets + Current Assets

= 3333333 +1000000

= $4333333

Current Ratio = Current assets / Current Liability

2.5 =Current Assets / 400000

Current Assets = 400000*2.5 = $1000000

c) Total Liability = Total Assets - Equity

= 4333333 - 2476188 = $1857141

Equity multiplier = Total Assets / Equity

1.75 = 4333333/ Equity

Here Equity = 4333333/1.75 = $2476188

d) Return On equity = Net profit / Equity * 100

= 430000/2476188 * 100

= 17.36%

Here Net Profit = Sales * Net Profit margin

= 5000000* 8.6% = $430000

e) Share price = EPS * PE Ratio

= 430000/650000 * 15.2

= $10.055

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data: Total...
BALANCE SHEET ANALYSIS Complete the balance sheet and sales information using the following financial data: Total assets turnover: 1.3x Days sales outstanding: 38 daysa Inventory turnover ratio: 4x Fixed assets turnover: 2.5x Current ratio: 2.3x Gross profit margin on sales: (Sales - Cost of goods sold)/Sales = 30% aCalculation is based on a 365-day year. Do not round intermediate calculations. Round your answer to the nearest cent. Balance Sheet Cash $   Current liabilities $   Accounts receivable    Long-term debt 65,000...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31 Assets Current assets: Cash $ 6,500 Accounts receivable, net 35,000 Merchandise inventory 70,000 Prepaid expenses 3,500 Total current assets 115,000 Property and equipment, net 185,000 Total assets $ 300,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities $ 50,000 Bonds payable, 10% 80,000 Total liabilities 130,000 Stockholders’ equity: Common stock, $5 par value 30,000 Retained earnings 140,000 Total stockholders’ equity 170,000 Total liabilities and...
1.Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2019 to $10.32...
1.Broussard Skateboard's sales are expected to increase by 20% from $8.6 million in 2019 to $10.32 million in 2020. Its assets totaled $3 million at the end of 2019. Broussard is already at full capacity, so its assets must grow at the same rate as projected sales. At the end of 2019, current liabilities were $1.4 million, consisting of $450,000 of accounts payable, $500,000 of notes payable, and $450,000 of accruals. The after-tax profit margin is forecasted to be 3%,...
Calculate Return on equity (ROE), Return on assets (ROA), Net Profit Margin (NPM), Debt ratio, and...
Calculate Return on equity (ROE), Return on assets (ROA), Net Profit Margin (NPM), Debt ratio, and Total assets turnover for 2018 and 2019. Explain why ROE is lower in 2019 than in 2018 (explain in terms of each ratio in DuPont equation for ROE). Income Statements ($ in millions) Balance Sheets ($ in millions) 2018 2019 Assets 2018 2019 Sales Revenue $2,580 $2,865 Cash $70 $50 Less: Cost of goods sold $1,060 $1,500 Short-Term investments $35 $9 Less: Operating Expenses...
The Manning Company has financial statements as shown next, which are representative of the company’s historical...
The Manning Company has financial statements as shown next, which are representative of the company’s historical average. The firm is expecting a 35 percent increase in sales next year, and management is concerned about the company’s need for external funds. The increase in sales is expected to be carried out without any expansion of fixed assets, but rather through more efficient asset utilization in the existing store. Among liabilities, only current liabilities vary directly with sales.    Income Statement Sales...
The condensed financial statements of Ness Company for the years 2019 and 2020 are presented below....
The condensed financial statements of Ness Company for the years 2019 and 2020 are presented below. Ness Company Balance Sheets December 31 (in thousands) 2020 2019 Current assets    Cash and cash equivalents $360 $320    Accounts receivable (net) 510 380    Inventory 430 420    Prepaid expenses 120 140       Total current assets 1,420 1,260 Property, plant, and equipment (net) 430 360 Investments 1 10 Intangibles and other assets 480 550       Total assets $2,331 $2,180 Current liabilities $870 $860 Long-term liabilities 411 270 Stockholders’...
Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company:...
Comprehensive Ratio Analysis Data for Lozano Chip Company and its industry averages follow. Lozano Chip Company: Balance Sheet as of December 31, 2019 (Thousands of Dollars) Cash $   220,000 Accounts payable $   600,000 Receivables 1,575,000 Notes payable 100,000 Inventories 1,155,000 Other current liabilities 540,000   Total current assets $2,950,000   Total current liabilities $1,240,000 Net fixed assets 1,325,000 Long-term debt 400,000 Common equity 2,635,000 Total assets $4,275,000 Total liabilities and equity $4,275,000 Lozano Chip Company: Income Statement for Year Ended December 31, 2019 (Thousands...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December...
The financial statements for Castile Products, Inc., are given below: Castile Products, Inc. Balance Sheet December 31   Assets         Current assets:            Cash   $21,000      Accounts receivable, net    250,000      Merchandise inventory    370,000      Prepaid expenses    12,000        Total current assets    653,000   Property and equipment, net    820,000        Total assets   $1,473,000        Liabilities and Stockholders' Equity         Liabilities:            Current liabilities   $260,000      Bonds payable, 11%    400,000        Total liabilities    660,000   Stockholders’ equity:            Common stock, $10 par value   $150,000      Retained earnings    663,000        Total stockholders’ equity    813,000        Total liabilities and equity   $1,473,000      Castile Products, Inc. Income Statement For the Year...
Liquidity measures The current ratio is ​(Round to two decimal​ places.) The​ firm's net working capital...
Liquidity measures The current ratio is ​(Round to two decimal​ places.) The​ firm's net working capital is​(Round to the nearest million​ dollars.) Activity measures The​ firm's total asset turnover is ? ​(Round to two decimal​ places.) Leverage measures The​ firm's debt-equity ratio is? ​(Round to two decimal​ places.) The​ firm's times interest earned ratio is (Round to two decimal​ places.) Profitability measures The​ firm's net profit margin is %? ​(Round to two decimal​ places.) The​ firm's return on assets​ (ROA)...
Financial statements for AAR Company appear below: AAR Company Balance Sheet December 31 Current assets:    ...
Financial statements for AAR Company appear below: AAR Company Balance Sheet December 31 Current assets:     Cash and marketable securities $21,000     Accounts receivable, net 160,000     Inventory 300,000     Prepaid expenses          9,000       Total current assets 490,000 Noncurrent assets:     Plant & equipment, net      810,000 Total assets $1,300,000 Current liabilities:     Accounts payable $75,000     Accrued liabilities 25,000     Notes payable, short term      100,000        Total current liabilities 200,000 Noncurrent liabilities:     Bonds payable      300,000...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT