Here is the income statement for Skysong, Inc. SKYSONG, INC. Income Statement For the Year Ended December 31, 2022
Sales revenue $404,100
Cost of goods sold 234,000
Gross profit 170,100
Expenses (including $16,700 interest and $26,400 income taxes) 83,500
Net income $ 86,600
Additional information:
1. Common stock outstanding January 1, 2022, was 24,700 shares, and 37,100 shares were outstanding at December 31, 2022.
2. The market price of Skysong stock was $14 in 2022.
3. Cash dividends of $22,900 were paid, $4,900 of which were to preferred stockholders.
Compute the following measures for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 2.51%)
(a) Earnings per share $enter earnings per share in dollars
(b) Price-earnings ratio enter price-earnings ratio in times times
(c) Payout ratio enter payout ratio in percentages % (d) Times interest earned enter times interest earned times
Answers
Answer:
Earnings per share
= Net income - Preferred dividend
No of common stocks outstanding at the end
= $86,600 - $4,900
37, 100 shares
= $2.20 per share
b. Price-earnings ratio
= Market price per share
Earnings per share
= $14
$2.20
= 6.36
c. Pay-out ratio
= Ordinary dividend paid x 100
Earnings after preferred dividend
= $18,000 x 100
$81,700
= 22.03%
c. Times interest earned
= Earnings before interest and tax
Interest expense
= Net income + Interest expense+ Tax
Interest expense
= $86,600 + $16,700 + $26,400
$16,700
= 7.77 times
Explanation:
Earnings per share equals net income minus preferred dividend divided by number of common stocks outstanding at the end of the year.
Price-earnings ratio is market price price per share divided by earnings per share.
Pay-out ratio is ordinary dividend paid divided by earnings after preferred dividend.
Times interest earned is earnings before interest and tax divided by interest expense. Earnings before interest and tax equals net income plus interest expense plus income tax.
Related Questions
Concord Company sells many products. Gizmo is one of its popular items. Below is an analysis of the inventory purchases and sales of Gizmo for the month of March. Concord Company uses the periodic inventory system.
Consider the following information from the financial statements for Rock Inc. Last Year This Year Accounts Receivable 23,535 29,197 Inventory 31,858 36,758 Total Current Assets 156,774 155,103 Total Assets 481,648 433,593 Total Current Liabilities 28,578 21,489 Total Liabilities 260,101 205,624 Sales 473,864 Cost of Goods Sold 142,263 Operating Expenses 148,349 Tax Expense 7 Calculate this years' gross profit ratio. (enter 2 decimal places. e.g. enter .2968 as .30)
Monica has found that her contribution margin per hour of time for her highest selling product is $2,500. She wants to dedicate an extra 40 hours a month to this product, but she needs to know the increase in total contribution margin if she does this. The product generally sells for $100 a unit. What would be the increase in total contribution margin for this product
When banks provide information about savings accounts, they typically quote the interest rates they offer (e.g. 1%) on a...A. Per day basisB. Per month basisC. Per six months basisD. Annual basis
Answers
Answer:
10.22%
Explanation:
Data provided in the question:
Assets of Chang corp. = $375,000
Sales = $550,000
Net income = $25,000
Net Income required at 15% ROE = 15% × $375,000
= $56,250
Therefore,
The profit margin =
or
The profit margin =
or
The profit margin = 10.22%
Answer:
Profit Margin = 10.227%
Explanation:
Given:
Total Assets = $375,000(Common equity)
Sales = $550,000
Net Income = $25,000
Return on equity = 15% = 15/100 = 0.15
Profit margin = ?
Computation of profit margin:
Profit margin = (Common Equity × Return on equity) / Sales
Profit Margin = ($375,000 x 0.15) / $550,000
Profit Margin = ($56,250) / $550,000
= 0.102272
Profit Margin = 10.227% (approx)
Answers
Answer:
A gain from the sale of used equipment for cash should be subtracted from net income
Explanation:
Indirect method make adjustment to reconcile the net income to cash. It depends on the account if it is added or subtracted to net income.
In this case, a gain from the sale of used equipment for cash is subtracted from net income.
Answers
Final answer:
A liability refers to any amount or debt that a firm or an individual owes, often arising from past transactions where assets were borrowed under the agreement of a future payback.
Explanation:
It can be seen as an obligation that the entity must fulfill in the future using their assets. A liability is often the result of a past transaction or event, where the entity has agreed to borrow assets and pay a certain rate of return.
Liabilities can be both short-term, such as accounts payable, or long-term, such as long-term debt. It is important for businesses and individuals to manage their liabilities effectively to maintain financial stability.
For example, a bank loan that a company uses to invest in new equipment would be considered a liability, as it represents an amount that the company is obligated to repay in the future.
Learn more about Liability here:
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Answer:
The state of being responsible for something, especially by law
Receivables 50,000 Notes Payable To Bank 20,000
Inventories 150,000 Total Current Liabilities $50,000
Total Current Assets $210,000 Long-Term Debt 50,000
Net Fixed Assets 90,000 Common Equity 200,000
Total Assets $300,000 Total Liabilities And Equity $300,000
The new owner thinks that inventories are excessive and can be lowered to the point where the current ratio is equal to the industry average, 2.5x, without affecting sales or net income. If inventories are sold and not replaced (thus reducing the current ratio to 2.5x); if the funds generated are used to reduce common equity (stock can be repurchased at book value); and if no other changes occur, by how much will the ROE change? What will be the firm’s new quick ratio?
Answers
Answer:
The firm's new quick ratio is 2.9
Explanation:
The current ratio is calculated as
Current ratio = Current assets / Current liabilities
2.5 times = (Cash + receivables + Inventories ) / (Accounts payable + Other current liabilities)
2.5 = ($10,000 + $50,000 + Inventories) / $50,000
$60,000 + inventories = $125,000
Inventories = $65,000
Therefore, $85,000 worth of inventories were sold off.
If the funds generated are used to reduce the common equity that is by repurchasing the equity at book value.
Hence, the common equity amounts to $115,000
Calculating the ROE before the inventory is sold off:
ROE = Net income / Stockholder's equity
= $15,000 / $200,000
= 0.075 or 7.5%
Calculating the ROE after selling off the inventory:
ROE = $15,000 / $115,000
= 0.13 or 13%
The firm's new quick ratio is
Quick ratio = (Current assets - Inventories) / Current liabilities
= ($210,000 - $65,000) / $50,000
= 2.9
Answers
Answer:
0.85
Explanation:
Given that
Dropped percentage of tuition and fees = 14%
Enrollment fall from 8,400 to 7,400
So, the cross elasticity between the two schools is
= Percentage change in quantity demanded of one good ÷ Percentage change in price of another good
where,
Percentage change in quantity demanded of one good equals to
= ($7,400 - $8,400) ÷ ($8,400)
= -11.9%
And, the percentage change in price of another good is -14%
So, the cross elasticity is
= -11.9% ÷ -14%
= 0.85
Answers
Answer:
Opportunity Cost:
Opportunity cost can be denied as the benefit a person has received but giving up taking another course of action. In other words, it can be defined as the next best alternative.
Given that the Nike women's store earns a profit in excess of $437,000. The owner of the store pays $18,000 per month as rent. A real estate agent approached the owner and informed her that she could add $7,700 per month to her firm's profits by renting out the portion of her store that she uses as a fitness studio.
From the given question the opportunity cost of continuing to operate the fitness studio within the store is $7,700.