b) Compute the return on assets, profit margin on sales, earnings per share, price-earnings ratio, and current ratio for each of the 5 years for Oriole Inc. (Round answers to 2 decimal places, e.g. 2.25 or 2.25%.) 2021 2020 2019 2018 2017 Return on assets % % % % % Profit margin on sales % % % % % Earnings per share $ $ $ $ $ Price-earnings ratio times times times Current ratio times times
16.
Oriole Inc. went public 3 years ago. The board of directors will be meeting shortly after the end of the year to decide on a dividend policy. In the past, growth has been financed primarily through the retention of earnings. A stock or a cash dividend has never been declared. Presented below is a brief financial summary of Oriole Inc. operations.
|
($000 omitted)
|
||||||||||
|
2021
|
2020
|
2019
|
2018
|
2017
|
||||||
| Sales revenue | $19,890 | $15,870 | $13,900 | $6,030 | $4,040 | |||||
| Net income | 2,370 | 1,410 | 800 | 710 | 250 | |||||
| Average total assets | 22,010 | 19,090 | 11,510 | 4,210 | 2,970 | |||||
| Current assets | 8,000 | 5,990 | 3,000 | 1,190 | 990 | |||||
| 3,560 | 3,230 | 1,180 | 500 | 400 | ||||||
| Common shares: | ||||||||||
| Number of shares outstanding (000) | 2,000 | 2,000 | 2,000 | 20 | 20 | |||||
| Average market price | $10 | $5 | $4 | — | — |
(b)
Compute the return on assets, profit margin on sales, earnings per share, price-earnings ratio, and
|
2021
|
2020
|
2019
|
2018
|
2017
|
|||||||||||
| Return on assets |
|
% |
|
% |
|
% |
|
% |
|
% | |||||
| Profit margin on sales |
|
% |
|
% |
|
% |
|
% |
|
% | |||||
| Earnings per share |
$
|
$
|
$
|
$
|
$
|
||||||||||
| Price-earnings ratio |
|
times |
|
times |
|
times | |||||||||
| Current ratio |
|
times |
|
times |
Solution
Given
|
|
2021 |
2020 |
2019 |
2018 |
2017 |
|
Sales revenue |
$19,890 |
$15,870 |
$13,900 |
$6,030 |
$4,040 |
|
Net income |
2,370 |
1,410 |
800 |
710 |
250 |
|
Average total assets |
22,010 |
19,090 |
11,510 |
4,210 |
2,970 |
|
Current assets |
8,000 |
5,990 |
3,000 |
1,190 |
990 |
|
Working capital |
3,560 |
3,230 |
1,180 |
500 |
400 |
|
Common shares: |
|
|
|
|
|
|
Number of shares outstanding (000) |
2,000 |
2,000 |
2,000 |
20 |
20 |
|
Average market price |
$10 |
$5 |
$4 |
— |
— |
Formula used
Return on assets =net income / average total assets
Profit margin on sales =net income / sales revenue
Earning per share =net income / Number of shares outstanding (000)
Price earning ratio =average market price / Earning per share
Current ratio = current assets / current liabilities
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
