Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your boss has asked you to calculate the profitability ratios of sixty-second Avenue Inc. and make comments on its second-year performance as compared to its

image text in transcribed
image text in transcribed
Your boss has asked you to calculate the profitability ratios of sixty-second Avenue Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows sixty-second Avenue Inc.'s income statement for the last two years. The company had assets of $8,225 million in the first year and $13,157 million in the second year. Common equity was equal to $4,375 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. Sixty-second Avenue Inc. Income Statement For the Year Ending on December 31 (Millions of dollars) Year 2 Year 1 Net Sales 4,445 3,500 Operating costs except depreciation and amortization 1,855 1,723 Depreciation and amortization 140 Total Operating Costs 2,077 1,863 Operating Income (or EBIT) 2,368 1,637 Less: Interest 320 131 Earnings before taxes (EBT) 2,048 1,506 Less: Taxes (40%) 819 602 Net Income 1,229 904 Calculate the profitability ratios of Sixty-Second Avenue Inc. in the following table. Convert all calculations to a percentage rounded to two decimal places

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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

Students also viewed these Accounting questions