Question:
The following condensed information was reported by Peabody Toys, Inc., for 2013 and 2012:
Required:
1. Determine the following ratios for 2013:
a. Profit margin on sales .
b. Return on assets .
c. Return on shareholders’ equity .
2. Determine the amount of dividends paid to shareholders during 2013.
Answer:
Requirement 1
a. Profit margin on sales $180 ÷ $5,200 = 3.5%
b. Return on assets $180 ÷ [($1,900 + 1,700) ÷ 2] = 10%
c. Return on shareholders’ equity $180 ÷ [($550 + 500) ÷ 2] = 34.3%
Requirement 2
Retained earnings beginning of period $100,000
The following condensed information was reported by Peabody Toys, Inc., for 2013 and 2012:
Required:
1. Determine the following ratios for 2013:
a. Profit margin on sales .
b. Return on assets .
c. Return on shareholders’ equity .
2. Determine the amount of dividends paid to shareholders during 2013.
Answer:
Requirement 1
a. Profit margin on sales $180 ÷ $5,200 = 3.5%
b. Return on assets $180 ÷ [($1,900 + 1,700) ÷ 2] = 10%
c. Return on shareholders’ equity $180 ÷ [($550 + 500) ÷ 2] = 34.3%
Requirement 2
Retained earnings beginning of period $100,000
