Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The following shows St. McStanky Beer Co.'s income statement for the last two years. The company had assets of $7,050 million in the first year

image text in transcribed

The following shows St. McStanky Beer Co.'s income statement for the last two years. The company had assets of $7,050 million in the first year and $11,278 million in the second year. Common equity was equal to $3,750 million in the first year, and the company distributed 100% of its earnings out as dividends during the first and the second years. In addition, the firm did not issue new stock during either year. St. McStanky Beer Co. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 3,810 3,000 Operating costs except depreciation and amortization 1,365 1,268 Depreciation and amortization 191 120 Total Operating Costs 1,556 1,388 Operating Income (or EBIT) 2,254 1,612 Less: Interest 225 129 Earnings before taxes (EBT) 2,029 1,483 Less: Taxes (40%) 812 593 Net Income 1,217 890 Calculate the profitability ratios of St. McStanky Beer Co. in the following table. Convert all calculations to a percentage rounded to two decimal places. Ratio Value Year 2 Year 1 53.73% 31.94% Operating margin Profit margin Return on total assets Return on common equity Basic earning power 12.62% 23.73% 19.99%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Financial Management

Authors: Eugene BrighamPhillip Daves

1st Edition

0324594712, 9780324594713

More Books

Students also viewed these Finance questions