The following information applies to Acorn Construction Company (ACC):

	Year 2	Year 1
Net sales	$ 1,180,000	$ 750,000
Income before interest and taxes	165,000	99,000
Net income	74,000	59,500
Interest expense	32,000	22,500
Stockholders' equity December 31	825,300	950,000
Common stock	765,300	925,000
Preferred stock dividends	31,500	31,500

Information on the number of shares outstanding is provided below:

Average number of shares outstanding, Year 1	45,500
Average number of shares outstanding, Year 2	40,500

Required:

(b) Compute earnings per share for ACC for Year 2 and Year 1:

 

(c) Compute price-earnings ratio for ACC for Year 2 and Year 1: (Market prices: Year 2 $17.50 per share, Year 1 $15.00 per share)

 

(d) Compute return on equity for ACC for Year 2 and Year 1:

 

Required:

(e) Compute net margin for ACC for Year 2 and Year 1: