Question 2

Condensed statement of financial position and income statement data for Pearl City Ltd. are shown below:

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Question 2 Condensed statement of financial position and income statement data for Pearl City Lt 2016 PEARL CITY LTD Statement of Financial Position December 31 (in thousands) 2018 2017 Assets Current assets Cash Accounts receivable Inventory Total current assets Property, plant, and equipment (net) 4,119 3,798 Total assets $6,248 55,374 Liabilities and Shareholders' Equity Liabilities Current liabilities $602 546 Non-current liabilities 3,074 2.320 Total liabilities 3,676 2166 Shareholders' equity Common shares Retained earings Total shareholders' equity 2,572 2,508 Total liabilities and shareholders' equity $6,248 $5,374 3,152 54,349 $500 1,510 2.010 2,339 $4,349 PEARL CITY LTD Income Statement Year Ended December 31 in thousands) 2018 2017 Sales (all on credit) $4,509 $4,023 Cost of goods sold 2,505 2,105 Gross profit 2,004 1,918 Http://edugen, wyplus.com/edgar . 2016 $3,573 1,783 1,790 1,454 Operating expenses Income from operations Interest expense Income before income tax Income tax expense Net income The company paid all dividends as soon as they were declared and has only issued common shares. There are no preferred shares. Retained earnings at the beginning of 2016 were $1.2 million. Calculate the cash dividends declared and dividend payout ratio for each year. (Round payout ratio to 1 decimal place, e.g. 5.2% ) 2016 2017 2018 Dividends declared (in thousands) $ Payout ratio LINK TO TEXT LINK TO TEXT LINK TO TEXT Calculate the asset turnover for each of the three years. Assume that total assets at the end of 2015 were equal to total assets at the end of 2016, Multiply the asset turnover for each year by the profit margin for each year from part (c) above to determine the return on assets for each year. (Round asset turnover to 2 decimal palces, e.q. 5.26 and return on assets to 1 decimal place, e.g. 5.2%. 2016 2017 2018 Asset turnover times times times Return on assets LINK TO TEXT LINK TO TEXT LINK TO TEXT Calculate the return on common shareholders' equity for each year. Assume that common shareholders' equity at the end of 2015 was equal to that amount for 2016. (Round answers to 1 decimal place, e.g. 5.2%) 2016 2017 2017 2018 Return on common shareholders' equity