Problem 14-22A (Algo) Ratio analysis LO 14-3, 14-4, 14-5

Perez Companys income statement information follows:

	Year 3				Year 2
Net sales	$	411,000			$	269,000
Income before interest and taxes		118,000				85,000
Net income after taxes		55,320				62,100
Interest expense		8,850				7,900
Stockholders equity, December 31 (Year 1: $194,000)		301,000				238,000
Common stock, December 31		196,000				172,000

The average number of shares outstanding was 7,840 for Year 3 and 6,880 for Year 2.

Required Compute the following ratios for Perez for Year 3 and Year 2.

a. Number of times interest was earned. (Round your answers to 2 decimal places.) b. Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.) c. Price-earnings ratio (market prices: Year 3, $67 per share; Year 2, $78 per share). (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. Return on average equity. (Round your percentage answers to 2 decimal places (i.e., 0.2345 should be entered as 23.45).) e. Net margin. (Round your percentage answers to 2 decimal places (i.e., 0.2345 should be entered as 23.45).)