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.
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
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.
(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.


Answer 1


Please see below


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


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


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

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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.

Learn more about  ethical behavior here:


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Direct material= $340


Giving the following information:

Direct labor $540

Beginning work in process inventory $330

Ending work in process inventory $420

Cost of goods manufactured $1620

Manufacturing overhead $830

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Data provided in the question:

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