H110 Income Statement For the Year Ended December 31 2019 Sales revenue $740,000 Less: Sales return and allowances 40,000 Net sales 700.000 Cost of goods sold 425,000 Gross profit 275,000 Operating expenses (including income taxes) 180,000 Net income 95,000 2018 $600,000 30,000 570,000 350,000 220,000 150,000 70,000 34 Additional information: 35 1. The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2017 36 2018, and 2019, respectively. 37 2. You must compute dividends paid. All dividends were paid in cash. 39 Instructions 40 (a) Compute the following ratios for 2018 and 2019 (1) Profit margin 5. Price-earnings ratio. (2) Gross profit rate. 6. Payout ratio. 43 (3) Asset turnover 7. Debt to assets ratio. (4) Earnings per share 45 (b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in the 46 financial position and operating results from 2018 to 2019 of Jergan Corporation 47 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 51 (ax(1) Profit margin 53 2019 Value Value 2 2018 Value Value Net income Net sales Profit margin 35 58 (a)(2) Gross profit rate 2019 Value Value 2 2018 Value Value Gross profit Net sales Gross profit rate 65 (a)(3) Asset turnover 2018 2019 Value Value Total assets, 2019 Total assets, 2018 Total assets, 2017 Average total assets Value Value ? ? SRRR 2019 Value Value 2018 value Net sales Average total assets Asset turnover Value 78 (a)(4) Earnings per share 2018 2019 Value Value Common shares outstanding, 2019 Common shares outstanding, 2018 Common shares outstanding, 2017 Average common shares outstanding Value Value 2 2019 Value Value 2 2018 Value Value Net Income - Pld. Dividends Average common shares outstanding Earnings per share 01 Dricaine ratio I ch1 91 (a)(5) Price-eamings ratio Stock price per share Eamings per share Price-earnings ratio 2019 Value Value ? 2018 Value Value 98 (a)(6) Payout ratio Prior year's retained earnings Plus: current year net income Less: current year's retained earnings Cash dividends declared 2019 Value Value Value 2018 Value Value Value 7 2019 Value 2018 Value Value Cash dividends declared (common) Net income Payout ratio Value 111(a ) Debt to assets ratio 2018 Value Value 113 114 2019 Value Value ? Value Current Liabilities Long-term debt Total liabilities Total assets Debt to assets ratio Value 116 117 118 120 121 After you have completed P13-3A, consider the additional question 1221. Assume that 2017 net income and total assets changed to $87,000 and total assets to $700,000. Show the impact of these changes on the ratios. H110 Income Statement For the Year Ended December 31 2019 Sales revenue $740,000 Less: Sales return and allowances 40,000 Net sales 700.000 Cost of goods sold 425,000 Gross profit 275,000 Operating expenses (including income taxes) 180,000 Net income 95,000 2018 $600,000 30,000 570,000 350,000 220,000 150,000 70,000 34 Additional information: 35 1. The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2017 36 2018, and 2019, respectively. 37 2. You must compute dividends paid. All dividends were paid in cash. 39 Instructions 40 (a) Compute the following ratios for 2018 and 2019 (1) Profit margin 5. Price-earnings ratio. (2) Gross profit rate. 6. Payout ratio. 43 (3) Asset turnover 7. Debt to assets ratio. (4) Earnings per share 45 (b) Based on the ratios calculated, discuss briefly the improvement or lack thereof in the 46 financial position and operating results from 2018 to 2019 of Jergan Corporation 47 NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a "?". 51 (ax(1) Profit margin 53 2019 Value Value 2 2018 Value Value Net income Net sales Profit margin 35 58 (a)(2) Gross profit rate 2019 Value Value 2 2018 Value Value Gross profit Net sales Gross profit rate 65 (a)(3) Asset turnover 2018 2019 Value Value Total assets, 2019 Total assets, 2018 Total assets, 2017 Average total assets Value Value ? ? SRRR 2019 Value Value 2018 value Net sales Average total assets Asset turnover Value 78 (a)(4) Earnings per share 2018 2019 Value Value Common shares outstanding, 2019 Common shares outstanding, 2018 Common shares outstanding, 2017 Average common shares outstanding Value Value 2 2019 Value Value 2 2018 Value Value Net Income - Pld. Dividends Average common shares outstanding Earnings per share 01 Dricaine ratio I ch1 91 (a)(5) Price-eamings ratio Stock price per share Eamings per share Price-earnings ratio 2019 Value Value ? 2018 Value Value 98 (a)(6) Payout ratio Prior year's retained earnings Plus: current year net income Less: current year's retained earnings Cash dividends declared 2019 Value Value Value 2018 Value Value Value 7 2019 Value 2018 Value Value Cash dividends declared (common) Net income Payout ratio Value 111(a ) Debt to assets ratio 2018 Value Value 113 114 2019 Value Value ? Value Current Liabilities Long-term debt Total liabilities Total assets Debt to assets ratio Value 116 117 118 120 121 After you have completed P13-3A, consider the additional question 1221. Assume that 2017 net income and total assets changed to $87,000 and total assets to $700,000. Show the impact of these changes on the ratios