PROBLEM 8-11
Net
Profit
Retained
Earnings
Total
Stockholders’
Equity
a. A stock dividend is
declared and paid.
b. Merchandise is purchased
on credit.
c. Marketable securities are
sold above cost.
d. Accounts receivable are
collected.
e. A cash dividend is
declared and paid.
f. Treasury stock is
purchased and recorded
at cost.
g. Treasury stock is sold
above cost.
0
0
+
0
0
0
0
–
0
+
0
–
0
0
0
0
+
0
–
–
+
243
PROBLEM 8-12
a.
1.
Net Profit Margin
=
2011:
$72,700
=
7.42%
$980,000
2010:
$64,900
=
6.76%
$960,000
2009:
$57,800
=
6.15%
$940,000
2008:
$51,200
=
5.69%
$900,000
2007:
$44,900
=
5.10%
$880,000
2.
Total Asset Turnover
=
Net Sales
Average Total Assets
2011:
$980,000
=
1.14 times per year
($859,000 + $861,000)/2
2010:
$960,000
=
1.11 times per year
($861,000 + $870,000)/2
2009:
$940,000
=
1.08 times per year
($870,000 + $867,000)/2
2008:
$900,000
=
1.04 times per year
($867,000 + $863,000)/2
2007:
Cannot compute average assets.
Year-End Balance Sheet Figures – Total Asset Turnover
2011:
$980,000
=
1.14 times per year
$859,000
2010:
$960,000
=
1.11 times per year
$861,000
2009:
$940,000
=
1.08 times per year
$870,000
$900,000
$880,000
$863,000
($859,000 + $861,000)/2
($861,000 + $870,000)/2
2009:
6.66%
($870,000 + $867,000)/2
2008:
5.92%
($867,000 + $863,000)/2
2007:
Cannot compute average assets.
Year-End Balance Sheet Figures – Return on Assets
2011:
$72,700
=
8.46%
$859,000
2010:
$64,900
=
7.54%
$861,000
2009:
$57,800
=
6.64%
$870,000
$51,200
$44,900
$863,000
Net Profit Margin
Net Profit Margin
246
5.
Operating Income Margin
=
Operating Income
Net Sales
2011:
$355,000 – $240,000
=
11.73%
$980,000
2010:
$344,000 – $239,000
=
10.94%
$960,000
2009:
$333,000 – $238,000
=
10.11%
$940,000
2008:
$320,000 – $239,000
=
9.00%
$900,000
2007:
$314,000 – $235,000
=
8.98%
$880,000
6.
Operating Asset Turnover
=
Net Sales
Average Operating Assets
2011:
=
1.26 times per year
2010:
=
1.23 times per year
2009:
=
1.21 times per year
($870,000 – $90,000 – $867,000 – $95,000)/2
2008:
$900,000
=
1.17 times per year
($867,000 – $95,000 – $863,000 – $100,000)/2
2007:
Average assets cannot be computed.
Year-End Balance Sheet Figures – Operating Asset Turnover
2011:
$980,000
=
1.26 times per year
$859,000 – $80,000
2010:
$960,000
=
1.24 times per year
$861,000 – $85,000
2009:
$940,000
=
1.21 times per year
$870,000 – $90,000
$900,000
2009:
12.24%
2008:
=
10.55%
2011:
$355,000 – $240,000
=
14.76%
$859,000 – $80,000
2010:
$344,000 – $239,000
=
13.53%
$861,000 – $85,000
2009:
$333,000 – $238,000
=
12.81%
$870,000 – $90,000
$320,000 – $239,000
$314,000 – $235,000
$863,000 – $100,000
9.
Sales to Fixed Assets
=
Net Sales
Average Net Fixed Assets
2011:
$980,000
=
1.98
($500,000 + $491,000)/2
2010:
$960,000
=
1.97
($491,000 + $485,000)/2
$940,000
($485,000 + $479,000)/2
$900,000
($479,000 + $470,000)/2
$980,000
$491,000
2009:
$940,000
1.94
$485,000
2008:
$900,000
1.88
$479,000
$880,000
250
10.
Return on Investment
=
Net Income Before Noncontrolling Interest and
Nonrecurring Items + [Interest Expense x (1 – Tax Rate)]
Average (Long-Term Liabilities + Equity)
Average Balance Sheet Figures
2011:
$72,700 + $6,500(1 – 0.33)
=
11.58%
($859,000 – $194,000 + $861,000 – $195,500)/2
2010:
$64,900 + $6,700(1 – 0.34)
=
10.35%
($861,000 – $195,500 + $870,000 – $195,500)/2
2009:
$57,800 + $8,000(1 – 0.34)
=
9.37%
($870,000 – $195,500 + $867,000 – $195,000)/2
2008:
$51,200 + $8,100(1 – 0.30)
=
8.50%
($867,000 – $195,000 + $863,000 – $196,500)/2
2007:
Average long-term liabilities + equity cannot be computed.
Year-End Balance Sheet Figures – Return on Investment
2011:
$72,700 + $6,500(1 – 0.33)
=
11.59%
$859,000 – $194,000
2010:
$64,900 + $6,700(1 – 0.34)
=
10.42%
$861,000 – $195,500
2009:
$57,800 + $8,000(1 – 0.34)
=
9.35%
$870,000 – $195,500
2008:
$51,200 + $8,100(1 – 0.30)
=
8.46%
$867,000 – $195,000
2007:
$44,900 + $11,000(1 – 0.34)
=
7.83%
$863,000 – $196,500
251
11.
Return on Total Equity
=
Net Income Before Nonrecurring Items –
Dividends on Redeemable Preferred Stock
Average Total Equity
Average Balance Sheet Figures
2011:
$72,700 – $6,400
=
12.77%
($520,000 + $518,000)/2
2010:
$64,900 – $6,400
=
11.33%
($518,000 + $515,000)/2
2009:
$57,800 – $6,400
=
10.03%
($515,000 + $510,000)/2
2008:
$51,200 – $6,400
=
8.38%
($510,000 + $559,000)/2
2007:
2011:
$72,700 – $6,400
=
12.75%
$520,000
2010:
$64,900 – $6,400
=
11.29%
$518,000
2009:
$57,800 – $6,400
=
9.98%
$515,000
2008:
$51,200 – $6,400
=
8.78%
$510,000
2007:
$44,900
=
8.03%
$559,000