Use the following information to answer questions : Bayside Inc. 2005 Income Statement ($ in thousands) Net sales $5,680 Less: Cost of goods sold 4,060 Less:
Depreciation 420 Earnings before interest and taxes 1,200 Less: Interest paid 30 Taxable Income $1,170 Less: Taxes 410 Net income $ 760 Bayside, Inc. 2004 and 2005 Balance Sheets ($ in thousands) 2004 2005 2004 2005 Cash $ 70 $ 180 Accounts payable $1,350 $1,170 Accounts rec. 980 840 Long-term debt 720 500 Inventory 1,560 1,990 Common stock 3,200 3,500 Total $2,610 $3,010 Retained earnings 940 1,200 Net fixed assets 3,600 3,360 Total assets $6,210 $6,370 Total liabilities & equity $6,210 $6,370 Calculate the following: for 2005 only (You will show your work and put it in the drop box).
Additional Information at the end of 2005: Fair Market Value of the Stock $190 per share Number of Common Shares Outstanding 100,000 Dividends paid during 2005 - $4 per share
1) The ratio reflects that the company has used more debt than equity to finance the growth of the company. ? YES OR NO ?
2) Calculate the Profit Margin for the company?
3) Explain this Profit Margin Percentage. What does it mean?
4) Calculate the Earnings Per Share for the company. (Net Income/Oustanding Shares)
5) Calculate the Price to Earnings Ratio?
6)If the industry Price to Earnings ratio is at 15, what could account for the difference from the industry average?