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hypothetical comparative statement data for the giant bookseller Barnes & Noble are presented here
hypothetical comparative statement data for the giant bookseller Barnes & Noble are presented here. All balance sheet data are as of the end of the fiscal year (in millions). Net sales Cost of goods sold Net income Accounts receivable 2022 $4,950.2 3.700.7 65.1 2021 $5,600.7 3.100.0 130.3 65.0 102.2 1.350.1 Inventory Total assets Total common stockholders' equity 1.250.1 2.850.0 960.8 3.250.1 1.100.5 Compute the following ratios for 2022. (Round asset turnover to 2 decimal places, eg 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%) (a) Profit margin % times (b) Asset turnover
T.Z50.1 Inventory Total assets Total common stockholders' equity 2,850.0 960.8 1,350.1 3,250.1 1,100.5 Compute the following ratios for 2022. (Round asset turnover to 2 decimal places, e.g 1.83 and all other answers to 1 decimal place, e.g. 1.8 or 2.5%) % (a) Profit margin (b) As times Asset turnover % (c) Return on assets % (d) Return on common stockholders' equity % (e) Gross profit rate e Textbook and Media Attempts: 1 of 3 used Submit Answer Save for Later
Expert Solution
Q1. Compute the following ratios for 2022. (Round to 2 decimal places)
Solution [A]: PROFIT MARGIN RATIO: it is the ratio used to determine the degree of money earned by the company in a particular period by operating the business.
Formula: Net Income / Net Sales# * 100
# Net sales = Sales – Sales return.
Therefore profit margin ratio = 65.10 / 4950.20 * 100
= 1.32 % (rounded off to 2 decimals)
Solution [b]: ASSET TURNOVER RATIO: it determines the efficiency of the company with which it deploys their assets to earn the revenue.
Formula: Net sales or revenue / Average total Assets#
Average Total Assets = (Opening assets + closing assets) / 2
= (3250.10 + 2850.00) / 2
= 3050.05
Therefore assets turnover ratio = 4950.20 / 3050.05
= 1.62 times (rounded off to 2 decimal)
Solution [c]: RETURN ON ASSETS RATIO- It shows how much profit company is able to make by using its assets in a particular period.
Formula: Net Income / Average total Assets# * 100
# Average total assets calculated above.
Therefore return on assets ratio= 65.10 / 3050.05 * 100
= 2.13 % (rounded off to 2 decimal)
Solution [d]: RETURN ON COMMON STOCK HOLDERS EQUITY: It shows Companies efficiency to generate profits for its stockholder’s.
Formula: Net Income / Total Common stockholder’s equity * 100
Therefore return on assets ratio= 65.10 / 960.80 * 100
= 6.78 % (rounded off to 2 decimal)
Solution [e]:GROSS PROFIT RATE: It shows relationship between gross profit and total net sales revenue
Formula: (Net Revenue – Cost of Goods sold) / Net Revenue
Therefore Gross profit rate = (4950.20 – 3700.70) / 4950.20 * 100
= 25.24 % (rounded off to 2 decimal)
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