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Expert-verified Found in: Page 842 ### Horngren'S Financial And Managerial Accounting

Book edition 6th
Author(s) Tracie L. Miller-Nobles, Brenda L. Mattison
Pages 992 pages
ISBN 9780134486833

# Micatin, Inc.’s comparative income statement follows. The 2017 data are given as needed.MICATIN INC.Comparative Income StatementYears Ended December 31, 2019, and 2018Dollars in thousands201920182017Net Sales Revenue$181,000$ 160,000 Cost of Goods Sold93,50086,500 Selling and Administrative Expenses45,00040,500 Interest Expense8,00012,000 Income Tax Expense11,00010,500 Net Income$23,500$ 10,500 Additional data: Total Assets$209,000$ 187,000$167,000Common Stockholders’ Equity96,00091,50080,500Preferred Dividends2,0002,0000Common Shares Outstanding During the Year15,00015,00010,000 Requirements Calculate the profit margin ratio for 2019 and 2018. Calculate the rate of return on total assets for 2019 and 2018.Calculate the asset turnover ratio for 2019 and 2018. Calculate the rate of return on common stockholders’ equity for 2019 and 2018.Calculate the earnings per share for 2019 and 2018. Calculate the 2019 dividend payout on common stock. Assume dividends per share for common stock are equal to$1.13 per share. Did the company’s operating performance improve or deteriorate during 2019?

 S. no. Ratio 2019 2018 1 Profit margin ratio 13.0% 6.6% 2 Return on total assets 15.9% 12.7% 3 Asset turnover ratio 0.91 times 0.90 times 4 Return on common stockholders’ equity 22.9% 9.9% 5 Earnings per share $1.43/share$0.68/share 6 The dividend payout on common stock for 2019 is 19.00% 7 Yes, the company’s operating performance improve
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## Step 1: Meaning of Profit margin ratio

The profit margin ratio shows the rate of income that remains after all business expenses have been paid. Formula to calculate the profit margin ratio is as follows: ## Step 2: (1) Calculate the profit margin ratio for 2019 and 2018

2019 2018 ## Step 3: (2) Calculate the rate of return on total assets for 2019 and 2018.

2019 2018 ## Step 4: (3) Calculate the asset turnover ratio for 2019 and 2018.

2019 2018 ## Step 5: (4) Calculate the rate of return on common stockholders’ equity

2019 2018 ## Step 6: (5) Calculate the earnings per share for 2019 and 2018

2019 2018 ## Step 7: (6) Calculate the 2019 dividend pay-out on common stock ## Step 8: (7) Analysing the company’s performance

The company’s performance improved during 2019 based on an improvement in all ratios evaluated. ### Want to see more solutions like these? 