Question

1. Kolyesna Hotels Group acquired some financial data for the years 2010 and 2011

Financial Data	2010	2011
Net Income	$118,000	$149,000
Total Revenue	$1,910,000	$2,070,000
Total Assets	$3,789,000	$4,612,000
Total Owner's Equity	$910,000	$1,010,000
Preferred Dividends Value	$10,000	$11,500
Common Shares Outstanding	42,000	57,000
Market Price per Share	$44.10	$50.82

Using the financial data table, calculate the required ratios for the Kolyesna Hotel Group in 2011 (assume there are 365 days in a year).
a) Profit margin ratio

b) Return on assets (ROA)

c) Return on equity (ROE)

d) Earnings per share (EPS) with common stock

e) Earnings per share (EPS) with preferred stock

f) Price/Earnings ratio (P/E) for both common and preferred stock

2. The return on asset (ROA) and profit margin ratio for Tiggie’s Quick Food Corp. were 11.25% and 24.80% in 2013. If the total asset value of this firm was $25 million at the end of 2013, what is the total revenue generated in 2013?

3. Jamming Luxury Lodging Properties has obtained the financial data as follows:

Balance Sheet Item	2009 ($)	2010 ($)
Total Assets	4,140,000	5,000,000
Total Owner's Equity	2,550,000	2,920,000
Net Income	1,900,000	2,050,000

Based on the financial information given, calculate return on owner’s equity (ROE) for Jamming Luxury Lodging Properties in 2010.

4. The financial data for Millen & Adams Boutique Hotel Inc. in both 2011 and 2012 are as follows:

Financial Data	2011	2012
Net Income	$412,500	$556,330
Preferred Dividends Value	$34,600	$32,100
Common Shares Outstanding	120,000	146,900

Based on the financial data table, calculate the earnings per share (EPS) with preferred stock for Millen & Adams Boutique Hotel Inc. in 2012.

Answer 1

1. Ratio of Kolyesna Hotels Group

Ratio analyisis	Amount in $
Sl.No	Ratio	Formula	2010	2011
a	Profit margin	=Net profit /Sales*100	=118000/1910000*100	=149000/2070000*100
			6.18%	7.20%
b	Return on assets	= Net income /Average Total Assets*100	=(118000/3789000)*100	=149000/((3789000+ 4612000)/2)*100
			3.11%	3.55%
c	Return on common stockholder’s equity	=Net Income/Shareholders equity	=118000/910000	=149000/1010000
			13%	15%
d	Earnings per share with common stock (WN*)	=Net Income available to equity shareholders/Number of common shares outstanding	=108000/42000	=137500/57000
			2.57	2.41
e	Earnings per share with preferred stock	=Dividend paid to prefernce shareholders/Number of prefernce shares outstanding	=10000/*Data not given	=11500/Data not given
f	Price-earnings ratio	= Market value pre share /Earnings pre share	=44.1/2.57	=50.82/2.41
			17.16	21.09

Workings*
Particulars	$                             2,010	$                       2,011
Net Income	$                           1,18,000	$                    1,49,000
Less:Prefernce Dividend	$                            (10,000)	$                     (11,500)
Income available to Equity shareholders	$                           1,08,000	$                    1,37,500

2.Tiggie’s Quick Food Corp.

Particulars	Value
ROA	11.25%
Toatl Assets	25million
= Net income /Average Total Assets*100	=Net income/25 = 11.25
Net Income	=11.25/100*25 = 2.8125 million
Profit margin	24.80%
=Net profit /Sales*100	=2.8125/total revenue = 24.8
Total Revenue	=2.8125/.248 = 11.3407million

3.. Jamming Luxury Lodging Properties

Particulars	2009	2010
Total Assets	$                             41,40,000	$                50,00,000
Total Owner's Equity	$                             25,50,000	$                29,20,000
Net Income	$                             19,00,000	$                20,50,000
ROE =
Return on common stockholder’s equity	=Net Income/Shareholders equity	=2050000/2920000
70%