# Perform ratio analysis, and discuss change in financial position and operating results Condensed balance sheet and income statement data for Jergan Corporation are presented here. JERGAN CORPORATION Balance Sheet December 31 2017 2016 2015 Cash \$30,000 \$20,000 \$18,000 Accounts receivable (net) 50,000 45,000 48,000 Other current assets 90,000 95,000 64,000 Investments 55,000 70,000 45,000 Plant and equipment (net) 500,000 370,000 358,000 \$725,000 \$600,000 \$533,000 Current liabilities \$85,000 \$80,000 \$70,000 Long-term debt 145,000 85,000 50,000 Common stock, \$10 par 320,000 310,000 300,000 Retained Earnings 175,000 125,000 113,000 \$725,000 \$600,000 \$533,000 JERGAN CORPORATION Income Statement For the Year Ended December 31 2017 2016 Sales revenue \$740,000 \$600,000 Less: Sales return and allowances 40,000 30,000 Net sales 700,000 570,000 Cost of goods sold 425,000 350,000 Gross profit 275,000 220,000 Operating expenses 180,000 150,000 Net income 95,000 70,000 Additional information: 1. The market price of Jergan's common stock was \$7.00, \$7.50, and \$8.50 for 2012, 2016, and 2017, respectively. 2. You must compute dividends paid. All dividends were paid in cash. Instructions (a) Compute the following ratios for 2016 and 2017. (1) Profit margin. 5. Price-earnings ratio. (2) Gross profit rate. 6. Payout ratio. (3) Asset turnover. 7. Debt to assets ratio. (4) Earnings per share.

Explanation:

1. Profit margin = Net profit / Net sales

2016 - Profit margin

=  (70,000 / 570,000) * 100

= 12.28%

2017 - Profit margin

= (95,000 / 700,000) * 100

= 13.57

2. Gross profit rate = Gross profit / Net sales

2016 - Gross profit rate

= (220,000 / 570,000) * 100

= 38.60%

2017 - Gross profit rate

= (275,000 / 700,000) * 100

= 39.29%

3. Asset turnover = Net sales / Average total assets

2016 - Asset turnover

= (570,000 / [(600,000 + 533,000) / 2 ]

= 570,000 / 566,500

= 1.01 times

2017 - Asset turnover

= (700,000 / [(725,000 + 600,000) / 2 ]

= 700,000 / 662,500

= 1.06 times

4. Earnings per share = Net income / Outstanding shares

2016 - Earnings per share

= 70,000 / (310,000/10)

= 70,000 / 31,000

= \$2.26 per share

2017 - Earnings per share

= 95,000/ (320,000/10)

= 95,000 / 32,000

= \$2.97 per share.

5. Price earnings ratio = Market value per share / EPS

2016 - price earnings ratio

= 7.50 /2.26

= 3.32 times

2017 - price earnings ratio

= 8.50/2.97

= 2.86 times

6. Payout ratio = Dividend per share / Net income or earnings per share × 100

2016 - payout ratio

=

7. Debts to assets ratio = Total liabilities / Total assets

2016 - Debts to assets ratio

=

## Related Questions

The purpose of sobriety checkpoints that are set up by community and state police is to deter drunk driving and ultimately save lives.While not mandated,the makers of Blackberry™ have complied with the public request of several legislators and have obediently removed apps that permit smartphone users to navigate around the checkpoints.Google™ and Apple™ have elected not to honor such requests.Google said the apps do not violate the company's content policy.After studying about ethics and social responsibility,which of the following statements applies to this situation? A) Laws represent the minimum guidelines that companies must follow,whereas a firm's ethical stance may venture beyond the minimum level of compliance.
B) Google and Apple are showing corporate social responsibility because they demonstrate concern for their investors,which is exactly where their focus should be.
C) Blackberry is acting philanthropically toward government.
D) Google and Apple are showing their distrust for big government,and their avoidance of contributing toward philanthropic causes.

A) Laws represent the minimum guidelines that companies must follow,whereas a firm's ethical stance may venture beyond the minimum level of compliance.

Explanation:

In the given scenario there are laws that allows community and state police to set up sobriety check points that discourages drunk drivers and saves lives.

The inclusion or removal of applications that helps drunk drivers avoid these checkpoints is not covered by the law. So if a company decides to include such applications it is at their discretion.

Blackberry have chosen to remove applications that helps drunk drivers avoid checkpoints. This is an example of when a company has ventured beyond the minimum level of compliance because of their ethical stance.

Google and Apple however have only ventured beyond the minimum compliance level because they have refused to honour requests by legislators to remove apps that permit smartphone users to navigate around the checkpoints.

The statement that  applies to this situation is : "Laws represent the minimum guidelines that companies must follow, whereas a firm's ethical stance may venture beyond the minimum level of compliance."

The correct answer is option A

In the scenario described, the companies are facing a situation where lawmakers have requested the removal of apps that allow users to navigate around sobriety checkpoints.

Option A is the most suitable because it reflects the fundamental distinction between legal compliance (following the law) and ethical behavior (going beyond what the law mandates). Let's break it down further:

Laws represent the minimum guidelines that companies must follow: This statement acknowledges that companies are legally obligated to comply with the laws and regulations of the jurisdictions in which they operate. In this case, lawmakers have made a request, but it's not legally mandated to remove these apps.

A firm's ethical stance may venture beyond the minimum level of compliance: This part of the statement highlights that ethical behavior goes beyond what is legally required.

Therefore, option A is correct.

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9) Selected information regarding a company's most recent quarter follows (all data in thousands). 9) _______ Direct labor \$540 Beginning work in process inventory \$330 Ending work in process inventory \$420 Cost of goods manufactured \$1620 Manufacturing overhead \$830 What was the cost of direct materials used for the quarter

Direct material= \$340

Explanation:

Giving the following information:

Direct labor \$540

Beginning work in process inventory \$330

Ending work in process inventory \$420

Cost of goods manufactured \$1620

To calculate the direct material used in production, we need to use the following formula:

cost of goods manufactured= beginning WIP + direct materials + direct labor + allocated manufacturing overhead - Ending WIP

1,620= 330 + DM + 540 + 830 - 420

Direct material= \$340

Case Description Tablets have become an ubiquitos part of our lives. The first models were launched in US in the year 2010.
Sales data is available for the first seven years (See below). As part of your analysis on the outlook for this industry:
a) How would you characterize the future for tablets? Are consumers crazy about this technology or are luke warm?
b) Prepare a five year forecast for this industry; has the market reached its peak (please identify the demand peak).

Please use the Bass Model Estimator provided. Use the spreadsheet tab called "Analysis Report"
Please clearly provide market size assumptions and justifications.
Year Annual Sales (Units Sold)
2010 3,000,000
2011 10,000,000
2012 25,000,000
2013 34,000,000
2014 39,000,000
2015 45,000,000
2016 51,000,000

a) According to the published sales statistics, it appears that the initial release of tablets in 2010 was warmly accepted by customers, since sales increased quickly in the years that followed. With only a 13% rise in revenue from 2015 to 2016, the rate of growth has slowed recently. This shows that customer enthusiasm for the technology may be waning.

b) We will utilize the Bass Model Estimator available on the "Analysis Report" page to project sales over the following five years. The "coefficient of innovation" (p) of this model accounts for the number of customers who have embraced the technology as well as the number of potential consumers who have not yet adopted the technology but may be persuaded to do so.

Explanation:

Use the following selected balance sheet and income statement information for Caroline Supply Co. (in millions) to compute asset turnover (AT) to the nearest hundredth of a percent.Operating profit before tax Earnings without interest expense (EWI) Average total assets Sales Tax rate on operating profit
\$58,300 \$93,400 \$360,600 \$1,135,420 35%

3.15 times

Explanation:

Asset turnover = Sales revenue / Average total assets

Asset turnover = \$1,135,420 / \$360,600

Asset turnover = 3.15 times

Question Help The production demand for widgets for a​ 250-workday year is​ 7,500 units. Ordering costs are​ \$25.00 per order and carrying costs are​ \$9.00 per unit per year. Four days must be allowed between order placement and order receipt. What is the reorder​ point, assuming known and constant​ variables?

120

Explanation:

Data provided in the question:

Number of workdays in a year = 250

Demand, D = 7,500 units

Ordering costs, F =​ \$25.00 per order

Carrying costs, C =​ \$9.00

Now,

Reorder point = Lead Time in days × Average Daily Demand

also,

Average Daily Demand = Demand ÷ Number of workdays in a year

= 7500 ÷ 250

= 30

Thus,

Reorder point = 4 × 30

= 120

Alpha Company sold goods to customers who used Under-the-Hill bank credit cards. Credit card sales on July 8, 2016 amounted to \$12,000 and were subject to a 2.5% bank fee. Use this information to prepare the General Journal entry (without explanation) for July 8, 2016.