Question

In: Accounting

The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020:

The following condensed information was reported by Peabody Toys, Inc., for 2021 and 2020:

($ in thousands) 2021 2020 Income statement information $5,200 $4,200 Net sales Net income 180 124 Balance sheet informa

 

Required:
1. Determine the following ratios for 2021:
a. Profit margin on sales
b. Return on assets
c. Return on equity
2. Determine the amount of dividends paid to shareholders during 2021.

 

Solutions

Expert Solution

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 equity                                $180 ÷ [($550 + 500) ÷ 2] = 34.3%

 

2.

Retained earnings beginning of period              $100,000

Add: Net income                                                      180,000

                                                                                   280,000

Less: Retained earnings end of period               150,000

Dividends paid                                                      $130,000

Dividends paid                                                      $130,000

Raffay answered 2 years ago
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