Case 1 Given the following financial statements historical ratios, and industry averages, calculate Sterling Company's financial ratios for the most recent year. (Assume a 365-day year.) Sterling Company Income Statement for the Year Ended December 31, 2012 Sales revenue $ 10,000,000 Less: Cost of Goods Sold Gross Profits Less: Operating expenses Selling expense General and administrative expens 7,500,000 2,500,000 300,000 650,000 Lease expense 50,000 Depreciation expense 200,000 Total operating expense Operating profits Less: Interest expense 1,200,000 1,300,000 200,000 Net profit before taxes 1,100,000 Less Taxes (rate - 40%) 440,000 Net profit after taxes 660,000 Less: Preferred stock dividends 50,000 Earnings available for common stockholders 610,000 Earnings per share Sterling Company Balance Sheet as of December 31, 2012 Assets Liabilities & Stockholders' Equtiy Cash 200.000 Accounte nauahle
Case 1 Given the following financial statements historical ratios, and industry averages, calculate Sterling Company's financial ratios for the most recent year. (Assume a 365-day year.) Sterling Company Income Statement for the Year Ended December 31, 2012 Sales revenue $ 10,000,000 Less: Cost of Goods Sold Gross Profits Less: Operating expenses Selling expense General and administrative expens 7,500,000 2,500,000 300,000 650,000 Lease expense 50,000 Depreciation expense 200,000 Total operating expense Operating profits Less: Interest expense 1,200,000 1,300,000 200,000 Net profit before taxes 1,100,000 Less Taxes (rate - 40%) 440,000 Net profit after taxes 660,000 Less: Preferred stock dividends 50,000 Earnings available for common stockholders 610,000 Earnings per share Sterling Company Balance Sheet as of December 31, 2012 Assets Liabilities & Stockholders' Equtiy Cash 200.000 Accounte nauahle
Corporate Financial Accounting
14th Edition
ISBN:9781305653535
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter14: Financial Statement Analysis
Section: Chapter Questions
Problem 14.1EX: Vertical analysis of income statement Revenue and expense data for Innovation Quarter Inc. for two...
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Notes:
a. The firm has an 8-year financial lease requiring annual beginning-of-year payments of $50,000. Five years of the lease have yet to run.
b. Annual credit purchases of $6,200,000 were made during the year.
c. The annual principal payment on the long-term debt is $100,000.
d. On December 31, 2012, the firm’s common stock closed at $39.50 per share.
Question:
1. What is the operating profit margin?
2. What is the net profit margin? (use earnings available for common stockholders)
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