For 2016 and 2015, compute return on sales (ROS), asset turnover (AT), return on assets (ROA), leverage
Question:
For 2016 and 2015, compute return on sales (ROS), asset turnover (AT), return on assets (ROA), leverage (L), return on common stockholders' equity (ROE), gross profit percentage (GP), operating income percentage (01), and earnings per share (EPS) to measure the ability to earn profits of Harmony Decor, Inc., whose comparative income statements follow. Use DuPont Analysis for ROA and ROE, and round each component ratio to three decimals; for other ratio computations, round to two decimals.
Addititonal data:
Did the company's operating performance improve or deteriorate during 2016?
Asset TurnoverAsset turnover is sales divided by total assets. Important for comparison over time and to other companies of the same industry. This is a standard business ratio.
Harmony Decor, Inc. Comparative Income Statements Years Ended December 31, 2016 and 2015 2016 2015 $250,000199,000 102,000 Net sales Cost of goods sold Gross profit Selling and general expenses Income from operations Interest expense Income before income tax Income tax expense Net income 123,000 102 127,000 97000 55,00051,000 46,000 14,00018,000 28,000 10,000 72,000 4 58,000 20,000 2016 2015 2014 ..$310,000 $305,000 $ 300,000 , $196,000 $194,000 $ 192,000 Common stockholders' equity.... Preferred dividend.... Average common shares outstanding 2,000 S 1,000 S during the year.... 15,000 14,000 13,000
Step by Step Answer:
a Return on net sales 2016 38000 2000 0144 2015 18000 1000 0085 250000 199000 b Asse...View the full answer
Financial Accounting
ISBN: 978-0134127620
11th edition
Authors: Walter Harrison, Charles Horngren, William Thomas, Wendy Tietz
Related Video
The Dupont analysis is an expanded return on equity formula, calculated by multiplying the net profit margin by the asset turnover by the equity multiplier. The DuPont analysis is also known as the DuPont identity or DuPont model.This Video will guide on how to calculate return on Equity and estimate profitability of shareholders using DuPont Analysis.
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