Asked by Brittany Hoffman on May 03, 2024
Verified
The records of Washington Company showed the following:
*10,000 shares outstanding at 1/1 and at 12/31;current market price,$30
**Including income tax;income tax rate is 30%
Calculate each of the following ratios:
A.Return on assets
B.Return on equity
C.Net profit margin
D.Earnings per share
Return on Assets
A profitability ratio indicating the efficiency with which a company uses its assets to generate net income, calculated by dividing net income by total assets.
Return on Equity
A financial ratio that measures the profitability of a company in relation to shareholders' equity, indicating how effectively equity supports operations and growth.
Earnings Per Share
A measure of a company's profitability calculated by dividing its net income by the number of outstanding shares of its common stock.
- Illustrate the ability to process and decode concluding financial ratios with provided data, covering turnover and average days ratios.
Verified Answer
ZK
Zybrea KnightMay 05, 2024
Final Answer :
A.Return on assets = $17,000 ÷ $330,000 = 5.2%.
B.Return on equity = $17,000 ÷ $200,000 = 8.5%.
C.Net profit margin = 17,000 ÷ $100,000 = 17%.
D.Earnings per share = $17,000 ÷ 10,000 = $1.70.
B.Return on equity = $17,000 ÷ $200,000 = 8.5%.
C.Net profit margin = 17,000 ÷ $100,000 = 17%.
D.Earnings per share = $17,000 ÷ 10,000 = $1.70.
Learning Objectives
- Illustrate the ability to process and decode concluding financial ratios with provided data, covering turnover and average days ratios.