COMPUTATION

Direction: Solve the following questions ( show your calculation)2*5=10

1) Firm ABC had operating profits of $100,000, taxes of $17,000, interest expense of $34,000 and preferred dividends of $5,000. What was the firm's net profit after taxes?

2) Candy Corporation had pretax profits of $1.2 million, an average tax rate of 34% and it paid preferred stock dividends of $50,000. There were 100,000 shares outstanding and no interest expense. What were candy Corporations earnings per share?

3) A firm has a debt-to-total assets ratio of 75%, $228,000 in debt, and

net income of $47,880. Calculate return on equity.

Note: Do not round intermediate calculations.

4) Low Carb Diet Supplement Incorporated has two divisions. Division A has a profit of $230,000 on sales of $2,120,000. Division B is able to make only $34,700 on sales of $381,000. Compute the profit margins (return on sales) for each division.

Note: Input your answers as a percent rounded to 2 decimal places.

5)

LANCASTER CORPORATION

Sales

$246,000

Cost of goods sold

122,000

Gross profit

124,000

Fixed charges (other than interest)

27,500

Income before interest and taxes

96,500

Interest

21,800

Income before taxes

74,700

Taxes (35%)

26,145

Income after taxes

$48,555

a. What is the times interest earned ratio?