Below are ratios for two companies which operate in the same industry.
|
|
Company A
|
Company B
|
|
P/E
|
27.8
|
63.0
|
|
Gross profit margin
|
59.1
|
66.2
|
|
Profit Margin
|
8.6
|
13.1
|
|
Quick
|
.8
|
0.5
|
|
Current
|
1.2
|
0.65
|
|
Debt-to-equity
|
.45
|
0.78
|
|
Return on equity
|
29.0
|
26.9
|
|
Return on assets
|
16.8
|
28.2
|
|
Dividend yield
|
1.7
|
1.2
|
|
Dividend payout
|
44.0
|
67.0
|
Required:
Evaluate the companies as a potential investment based on the given ratios.
In 2011, Jeffrey Company disposed of a segment of its business and incurred a pretax loss on the disposal of $40,000. In the same year, a flood caused $15,000 of damages to the building. The flood damage qualified as an extraordinary item. Income from continuing operations before taxes was $100,000 for 2011 and the 20 percent tax rate applied to all of the items above. Prepare a partial income statement starting with income from continuing operations before taxes for the year 2011 and concluding with net income.