In: Accounting
Otis Company’s income statement information follows:
2018 | 2017 | ||||||
Net sales | $ | 480,000 | $ | 320,000 | |||
Income before interest and taxes | 120,000 | 98,000 | |||||
Net income after taxes | 81,000 | 72,000 | |||||
Interest expense | 9,000 | 8,000 | |||||
Stockholders’ equity, December 31 (2016: $200,000) | 300,000 | 240,000 | |||||
Common stock, December 31 | 240,000 | 200,000 | |||||
The average number of shares outstanding was 9,600 for 2018 and 8,000 for 2017.
Required
Compute the following ratios for Otis for 2018 and 2017.
Number of times interest was earned. (Round your answers to 2 decimal places.)
Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.)
Price-earnings ratio (market prices: 2018, $64 per share; 2017, $78 per share). (Round intermediate calculations and final answers to 2 decimal places.)
Return on average equity. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
Net margin. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)
Calculate: Interest Earned, Earnings Per Share, Price-earnings Ratio, Return on Equity, Net Margin