Homework #12 Seve 9 Problem 16-19 (Algo) Financial Ratios for Assessing Profitability and Market Performance (L016-5, L016- 6) 00 po tock Herences Paul Sabin organized Sabin Electronics 10 years ago to produce and sell several electronic devices on which he had secured Although the company has been follly profitable, it is now experiencing a severe cash shortage. For this reason, it is requestingu $640.000 long term loan from Guirport Ste Bank $170.000 of which will be used to bolster the Cath account and $470.000 o wnich will be used to modernize equipment. The company's financial statements for the two most recent years follow Sabin Electronics Comparative Balance Sheet Assets This Year Last Year Current assets Cash Marketable securities $ 126,000 $ 290, 11.00 Accounts receivable, net Inventory 659.000 40.00 1,220,000 735, Prepaid expenses 14.000 36,000 Total current assets 1.639,00 1,512.000 Plant and equipment, net 2.084,600 1.470.000 Total assets 3,923,60 $ 2.982,00 Liabilities and Stockholders' Equity Liabilities: Current Liabilities $ 370, 1 400,000 820, . Bonds payable, 12 Total Liabilities 1.40x200 Stockholders equity: 830.com 330,000 Common stock, $ 20 par 1,423,00 912,200 Retained earnings 23,6 1 , Total stockholders' equity $ 3,923,600 $ 2,982,00 Total liabilities and stockholders' equity M Question - Homer. Connect Homework #12 Help SEE Sutrit 9 0.8 points Sabin Electronics Comparative Incane Statenent and Reconciliation This Year Sales $ 5.700,00 Cost of goods sold 4.e15.040 Gross margin 1,685,00 Selling and administrative expenses 601. Net operating income 1.000.000 Interest expense 96, Net Income before taxes sea, Income taxes (0) 277,400 Net income 635,600 Connon dividends 124,890 Net Income retained 511,00 912,000 Beginning retained earnings 5 1,423,600 Ending retained camnings Last Year 54,170,00 3.599, 1,181, 576,602 661,00 95,000 50.000 152.490 355,60 183.000 eBook 252,600 659,400 5912,600 References During the past year, the company introduced several new product lines and raised the selling prices on a number of old productes in order to improve its profit margin. The company also hired a new sales manager, who has expanded sales into several new territorios. Sales terms are 3/10. n/30. All sales are on account Assume Paul Sabin has asked you to assess his company's profitability and stock market performance Required: 1 You decide first to assess the company's stock market performance. For both this year and last year, compute a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $60 per share: last year it sold for 555 per share. c. The dividend payout ratio. d. The price earnings ratio (Assume that the industry norm for the price-camnings ratio is 7 c. The book value per share of common stock 2. You decide next to assess the company's profitability. Compute the following for both this year and last year a. The gross margin percentage b. The net profit margin percentage. c. The return on total assets. (Total assets at the beginning of last year were $2.942.0001 d. The return on equity (Stockholders' equity at the beginning of last year was 51,732,000) e. Is the company's financial leverage positive or negative? 9 the net profit margin percentage c. The return on total assets. (Total assets at the beginning of last year were $2.942.000) d. The return on equity (Stockholders' equity at the beginning of last year was $4732.000) e is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below 0.8 points Required 1 Required 2 hook References You decide first to assess the company's stock market performance. For both this year and last year, computer a. The earnings per share. There has been no change in common stock over the last two years. (Round your answers to 2 decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $60 per share: last year it sold for 55 per here to not round intermediate calculations. Round your percentage answers to 1 decimal place) c. The dividend payout ratio (Do not round intermediate calculations, Round your percentage answers to 1 decimal pce.) d. The price earnings ratio. (Assume that the industry norm for the price earnings ratio is 7.) (Do not round intermediate calculations. Round your answers to 2 decimal places.) e. The book value per share of common stock. (Round your answers to 2 decimal places) Show This Year Last Year a. Earnings per share b. Dividend yield ratio c. Dividend payout ratio d. Price-earnings ratio eBook value per share % Required 25 9 b. The net profit margin percentage The return on total assets. (Total assets at the beginning of last year were $2.942.000) d. The return on equity (Stockholders' equity at the beginning of last year was $1732.000 e. Is the company's financial leverage positive or negative? Complete this question by entering your answers in the tabs below. 0.8 points Required 1 Required 2 Ook You decide next to assess the company's profitability. Compote the following for both this year and last year a. The gross margin percentage. (Round your percentage answers to decimal place) b. The net profit margin percentage. (Round your percentage answers to 1 decimal place.) c. The return on total assets. (Total assets at the beginning of last year were $2,942,000. (Round your percentage answers to 1 decimal place.) d. The return on equity (Stockholders' equity at the beginning of last year was $1.732,000) (Round your percentage answer to 1 decimal place.) e. Is the company's financial leverage positive or negative? Heferences This Year Last Year a Gross margin percentage D. Net profit margin percentage c. Return on total assets d. Return on equity e Financial Leverage $