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Eagle Company Comparative Income Statements (000's omitted) For the Years Ended December 31, 20x8 and 20x7...

Eagle Company
Comparative Income Statements (000's omitted)
For the Years Ended December 31, 20x8 and 20x7
20x8 20x7
Net Sales $       820 $       550
Cost of Goods Sold           374           278
Gross Profit           446           272
Operating Expenses           120           112
Operating Income           326           160
Interest Expense             34             16
Income Before Income Taxes           292           144
Income Taxes             37             30
Net Income $       255 $       114
Earnings Per Share $    10.20 $      4.56
Eagle Company
Comparative Balance Sheets (000's omitted)
December 31, 20x8 and 20x7
Assets: 12/31/20x8 12/31/20x7
Current Assets $       134 $       130
Property, Plant, and Equipment (net)           840           510
Total Assets $       974 $       640 600
Liabilities and Stockholders' Equity:
Current Liabilities             67             64
Long-Term Liabilities           260             85
Total Liabilities           327           149
Stockholders' Equity           647           491 500
Total Liabilities and Stockholders' Equity $       974 $       640
Common Stock: 20x8 20x7
Market Price Per Share at 12/31 $    64.00 $    28.40
Cash Dividends Per Share $      4.00 $      5.25

Debt Ratio: _____ (20x8) and ______ (20x7)

Times Interest Earned Ratio: _____ (20x8) and ______ (20x7)

Net Profit Margin Ratio: _____ (20x8) and ______ (20x7)

Gross Profit Ratio: _____ (20x8) and ______ (20x7)

Asset Turnover: _____ (20x8) and ______ (20x7)

Return on Assets: _____ (20x8) and ______ (20x7)

Return on Equity: _____ (20x8) and ______ (20x7)

Price/Earnings Ratio: _____ (20x8) and ______ (20x7)

Dividend Yield Ratio: _____ (20x8) and ______ (20x7)

Solutions

Expert Solution

1. Debt Ratio is Total Liabilities divided by Total Assets

For 2018:Total Assets=$974

Total Liabilities=$327

Debt Ratio= 327/974=0.34

For 2017: Total Assets=$640

Total Liabilities=$149

Debt Ratio= 149/640=0.23

2.Times Interest Earned Ratio:The times interest earned ratio is, dividing income before interest and tax by the interest Paid.

For 2018-

Income before tax =$292

Interest paid=$34

Income before taxes and interest = 292-34=$258

Times Interest Earned Ratio= Income before taxes and interest/Interest paid= 258/34= 7.59 Times

For 2017-

Income before tax =$144

Interest paid=$16

Income before taxes and interest = 144-16=$128

Times Interest Earned Ratio= Income before taxes and interest/Interest paid=128/16 = 8 Times

3.Net Profit Margin Ratio =  net income divided by net sales

Net Income = Total Income -Total Expense

Net Sales=Sales - Returns if any

For 2018- Net Income=326-120 =$206

Net Sales=$820

Net Profit Margin Ratio =206/820=0.25

For 2017-

Net Income=160-112 =$48

Net Sales=$550

Net Profit Margin Ratio =48/550=0.087

4. Gross Profit Ratio=(COGS-net sales)/net sales

For 2018-Cost of goods sold=374

Total Sales=$820

Gross Profit Ratio=(820-374)/820=0.54

For 2017-Cost of goods sold=278

Total Sales=$550

Gross Profit Ratio=(550-278)/550=0.49

5.Asset Turnover=

Net Sales/ Total Assets

For 2018- 820/974=0.842 times

For 2017-550/640 =0.86 times

6.Return on Asset =Net Income / Average Total Assets

Net Income = Sales- COGS

For 2018- Net Income=820-374=$446

Total Asset=$974

Return on Asset =446/974=0.46 times

For 2017- Net Income=550-278=$272

Total Asset=$640

Return on Asset =272/640= 0.425times

ekkarill92 answered 5 months ago
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