(1)
Introduction:
Profit margin ratio is calculated by dividing net income by the net sales.
To calculate:
Profit margin ratio.
Answer to Problem 5BTN
Profit margin ratio for 2013 = 11.48%
Profit margin ratio for 2012 = 9.94%
Explanation of Solution
Profit margin ratio for 2013 = $820,470 / $7,146,079
= 11.48%
Profit margin ratio for 2012 = $660,931 / $6,644,252
= 9.94%
(2)
Introduction:
Gross profit ratio is a part of profitability ratio that is calculated by dividing gross profit by net sales.
To calculate:
Gross-profit ratio.
Answer to Problem 5BTN
Gross-profit ratio for 2013 = 45.91%
Gross-profit ratio for 2012 = 43.04%
Explanation of Solution
Gross profit = Net sales- COGS
Gross-profit ratio for 2013 = $3,280,848 / $7,146,079
= 45.91%
Gross-profit ratio for 2012 = $2,859,882 / $6,644,252
= 43.04%
(3)
Introduction:
Return on total asset is a ratio that calculated by dividing earnings before income tax by total assets.
To calculate:
Return on total asset.
Answer to Problem 5BTN
Return on total assets in 2013 = 26.49%
Return on total assets in 2012 = 24.25%
Explanation of Solution
Average total assets = (Opening bal. + Closing bal.)/2
2013 | 2012 | |
Opening Assets | $4,754,839 | $4,407,094 |
Closing assets | $5,357,488 | $4,754,839 |
Average assets | $5,056,163.5 | $4,580,966.5 |
Return on total assets in 2013 = $1,339,700 / $5,056,163.5
= 26.49%
Return on total assets in 2012 = $1,111,100/ $4,580,966.5
= 24.25%
(4)
Introduction:
Return on common
To calculate:
Return on common stockholder’s equity.
Answer to Problem 5BTN
Return on common stockholder’s equity for 2013 = 61.58%
Return on common stockholder’s equity for 2012 = 68.51%
Explanation of Solution
Average Shareholders’ equity = (Opening bal. + Closing bal.)/2
2013 | 2012 | |
OpeningShareholders’ Equity | $1,048,373 | $880,943 |
ClosingShareholders’ Equity | $1,616,052 | $1,048,373 |
Average Shareholders’ Equity | $1,332,212.5 | $964,658 |
Return on common stockholder’s equity for 2013 = $820,470 / $1,332,212.5
= 61.58%
Return on common stockholder’s equity for 2012 = $660,931 /$964,658
= 68.51%
(5)
Introduction:Earnings per share (EPS) is that part of the profit of the company which is allocated to common stock per share. Earnings per share acts as an indicator of a company’s profitability.
To calculate:
Basic net income per common share.
Answer to Problem 5BTN
Basic net income per common share 2013 = $3.76
Basic net income per common share 2012 = $3.01
Explanation of Solution
Basic net income per common share 2013 = $3.76
Basic net income per common share 2012 = $3.01
- The values are taken from consolidated income statement
Analysis and interpretation: The performance of Hershey’s have improved in all the areas.
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Chapter 13 Solutions
Loose-Leaf for Managerial Accounting with Connect
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