Exercise 4-6 (Algorithmic)
Profitability Ratios
The following amounts are from Shimura Company's financial statements at the end of the current year: total assets, $426,000; total liabilities, $172,000; stockholders' equity, $254,000; net sales, $800,000; cost of goods sold, $486,000; operating expenses, $178,000; and dividends, $40,000. During the current year, total assets increased by $75,000. Total stockholders' equity was affected only by net income and dividends.
Compute the (1) profit margin, (2) asset turnover, (3) return on assets, (4) debt to equity ratio, and (5) return on equity. If required, round your answers to one decimal place.
1. Profit margin %
2. Asset turnover times
3. Return on assets %
4. Debt to equity ratio %
5. Return on equity %