Background The income statement for Western Grain Company, a producer of agricultural products for industrial as Pase 469 well as consumer markets, is shown here. Western Grain's total assets are $4,2371 million, and its equity is $1,713.4 million. Consolidated Earnings and Retained Earnings Year Ended December 31 (Milions) 2017 Net sales $6.295.4 Cost of goods sold 2.989.0 Selling and administrative expense 2.237.5 Operating profit 1,068.9 Interest expense 33.3 Other income (expense), net (15) Earnings before income taxes 1,034.1 Income taxes 353.4 Net earnings 680.7 (Net earnings per share) $ 294 Retained earnings. beginning of year 3033.9 Dividends paid (305.2) Retained carnings, end of syear $3,409.4 Task Calculate the following profitability ratios: profit margin, return on assets, and return on equity. Assume that the industry averages for these ratios are as follows: profit margin, 12 percent; return on assets, 18 percent; and return on equity. 25 percent. Evaluate Western Grain's profitability relative to the industry averages. Why is this information useful?

Background The income statement for Western Grain Company, a producer of agricultural products for industrial as Pase 469 well as consumer markets, is shown here. Western Grain's total assets are $4,2371 million, and its equity is $1,713.4 million. Consolidated Earnings and Retained Earnings Year Ended December 31 (Milions) 2017 Net sales $6.295.4 Cost of goods sold 2.989.0 Selling and administrative expense 2.237.5 Operating profit 1,068.9 Interest expense 33.3 Other income (expense), net (15) Earnings before income taxes 1,034.1 Income taxes 353.4 Net earnings 680.7 (Net earnings per share) $ 294 Retained earnings. beginning of year 3033.9 Dividends paid (305.2) Retained carnings, end of syear $3,409.4 Task Calculate the following profitability ratios: profit margin, return on assets, and return on equity. Assume that the industry averages for these ratios are as follows: profit margin, 12 percent; return on assets, 18 percent; and return on equity. 25 percent. Evaluate Western Grain's profitability relative to the industry averages. Why is this information useful?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2PB

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