- high cost areas
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- household goods shipping
- what is equity
You are considering investing in Wheatley International. The company has provided you with the balance sheet and income statement for the previous year. The current price of one share of stock is $46.25. Earnings per share last year was $1.86. Wheatley International has 100,000 shares outstanding and no preferred stock.
Problem 1: Calculate the requested financial ratios:
a. Current ratio
b. Debt to equity ratio
c. Return on sales (use net income AFTER taxes)
d. Return on equity (use net income AFTER taxes)
e. Earnings per share (use net income AFTER taxes)
Wheatley International
Income Statement
REVENUES
Net Sales $1,053,000
COST OF GOODS SOLD
Beginning Inventory $154,800
Merchandise Purchased 316,800
Cost of Goods Available For Sale 471,600
Less: Ending Inventory -126,600
Cost of Goods Sold $345,000
GROSS PROFIT (GROSS MARGIN) $708,000
OPERATING EXPENSES
Selling Expenses
Salaries $180,000
Advertising 90,000
Total Selling Expenses $270,000
General Expenses
Insurance $54,000
Interest Expense 24,600
Rent 13,800
Utilities 8,400
Total General Expenses $100,800
Total Operating Expenses $370,800
NET PROFIT (INCOME) BEFORE TAXES 337,200
Less: Income Tax Expenses (25%) 84,300
NET INCOME (PROFIT) AFTER TAXES $252,900
Problem 1: Calculate the requested financial ratios:
a. Current ratio
b. Debt to equity ratio
c. Return on sales (use net income AFTER taxes)
d. Return on equity (use net income AFTER taxes)
e. Earnings per share (use net income AFTER taxes)
Wheatley International
Income Statement
REVENUES
Net Sales $1,053,000
COST OF GOODS SOLD
Beginning Inventory $154,800
Merchandise Purchased 316,800
Cost of Goods Available For Sale 471,600
Less: Ending Inventory -126,600
Cost of Goods Sold $345,000
GROSS PROFIT (GROSS MARGIN) $708,000
OPERATING EXPENSES
Selling Expenses
Salaries $180,000
Advertising 90,000
Total Selling Expenses $270,000
General Expenses
Insurance $54,000
Interest Expense 24,600
Rent 13,800
Utilities 8,400
Total General Expenses $100,800
Total Operating Expenses $370,800
NET PROFIT (INCOME) BEFORE TAXES 337,200
Less: Income Tax Expenses (25%) 84,300
NET INCOME (PROFIT) AFTER TAXES $252,900
Calculating Financial Ratios, Help!?
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