Match each computation to one of the profitability measures in the table.

Profitability Measures		Computations
Asset turnover		$8,280,000 [($5,785,000 + $5,595,000) 2]
Return on total assets		($801,420 + $127,000) [($6,609,000 + $6,419,000) 2]
Return on stockholders' equity		$801,420 [($4,079,000 + $3,875,050) 2]
Return on common stockholders' equity		($801,420 $65,000) [($3,591,500 + $3,447,840) 2]
Earnings per share on common stock		($801,420 $65,000) 250,000 shares
Price-earnings ratio		$35 $3.05
Dividends per share		$175,000 250,000 shares
Dividend yield		$0.70 $35

Feedback

Look for patterns in the computations and match them to ratios that are related to each other. Identify the amounts in the computations and consider how they are related to amounts in other computations. Note that two of the computations use shares.

Comparative Income Statement

Use the following comparative income statement form to enter amounts you identify from the computations on the Liquidity and Solvency Measures part and on the Profitability Measures part. Compute any missing amounts and complete the horizontal analysis columns. Enter percentages as decimal amounts, rounded to one decimal place. When rounding, look only at the figure to the right of one decimal place. If < 5, round down and if 5, round up. For example, for 32.048% enter 32.0%. For 32.058% enter 32.1%.

Comparative Income Statement For the Years Ended December 31, 20Y6 and 20Y5
							Increase/(Decrease)
	20Y6			20Y5			Amount			Percentage
Sales		$			$7,287,000			$				%
Cost of goods sold					(3,444,000)							%
Gross profit		$			$3,843,000			$				%
Selling expenses		$			$(1,457,600)			$				%
Administrative expenses		(1,242,000)			(1,106,000)							%
Total operating expenses		$			$(2,563,600)			$				%
Operating income		$			$1,279,400			$				%
Other expense (interest)					(120,600)							%
Income before income tax expense		$			$1,158,800			$				%
Income tax expense					(181,980)							%
Net income		$			$976,820			$				%