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Albers Automotive

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Albers Automotive Comparative data for Albers Automotive for the two-year period 2009–2010 are presented below. Income Statement Data 2010 2009 Net Sales $1,500,000 $1,200,000 Cost of Goods Sold 934,000 741,000 Gross Profit $ 566,000 $ 459,000 Operating Expense 376,000 277,000 Operating Income $ 190,000 $ 182,000 Other Expense (interest) 15,000 12,000 Earnings Before Income Tax $ 175,000 $ 170,000 Income Taxes 66,000 71,000 Net Income $ 109,000 $ 99,000 Dividends Paid 48,000 42,000 Net Increase in Retained Earnings $ 61,000 $ 57,000 Balance Sheet Data Assets 2010 2009 Cash $ 30,000 $ 10,000 Receivables (net) 130,000 90,000 Inventory 170,000 113,000 Land, Buildings, and Equipment (net) 650,000 547,000 Intangible Assets 20,000 20,000 $1,000,000 $780,000 Liabilities and Stockholders’ Equity 2010 2009 Trade Notes and Accounts Payable $ 100,000 $ 40,000 Miscellaneous Current Liabilities 50,000 11,000 5% Bonds Payable 300,000 240,000 Common Stock, $10 Par 100,000 100,000 Additional Paid-In Capital 51,000 51,000 Retained Earnings 399,000 338,000 $1,000,000 $780,000 Market price of stock end-of-each year: $81 $68 Required: a. Compute the following ratios for both years. 1. net profit margin 2. total asset turnover (use year-end assets) 3. return on assets (use year-end assets) 4. operating income margin 5. operating asset turnover (use year-end assets) 6. return on operating assets (use year-end assets) 7. return on investment (use year-end, long-term debt and stockholders equity) 8. return on total equity (use year-end total equity) 9. basic earnings per share 10. degree of financial leverage 11. price/earnings ratio 12. dividend payout ratio 13. dividend yield b. Perform a DuPont analysis for both years, using both net profit and operating income. Comment on the results. c. Comment on the trend in profitability as indicated by the ratios given. d. Why is return on investment lower than return on equity? e. Describe the firm’s dividend policy. Could this be related to market price? Business Management Assignment Help, Business Management Homework help, Business Management Study Help, Business Management Course Help

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