Question 1: Follies bookstore, the only bookstore close to campus, had a net income in 2003 of $90,000. Here are some of the ratios from the annual report.
Profit Margin: 12%
Return on Investment: 20%
Debt to Asset Ratio: 55%
Using these ratios, calculate the following for Follies Bookstore:
a. Sales
b. Total Assets
c. Total Asset Turnover
d. Total Debt
e. Stockholder's Equity
f. Return on Equity
Question 2: Electro Wizard Company produces a popular video game called Destructo, which sells for $32. Last year Electro Wizard sold 50,000 Destructo games each of which costs $6 to produce. Electro Wizard incurred selling and administrative expenses of $80,000 and depreciation expense of $10,000. In addition, Electro Wizard has a $100,000 loan outstanding at 12%. Their tax rate is 40%. There are 100,000 common shares outstanding.
Prepare an income statement for Electro Wizard in good form (includes EPS)
Electro Wizard Company
Income Statement
For year ending 12/31/20..
Sales
Less COGS
Gross Profit
Less Operating Expenses
Operating Profit (EBIT)
Less Interest Expense
Earnings Before Taxes
Less Taxes
Net Income
Common Shares
Earnings Per Share