Question

28) Targee Inc. has the following income statement (in mulons). Targee, INC. Income Statement For the Year Ended December 31, 2020 Net Sales $3,300 Cost of Goods Sold 2.280 Gross Profit 1,950 Operating Expenses 45 Net Income $1.905 Using vertical analysis, what percentage is assigned to Cost of Goods Sold? a. 70% b. 6996 c. 100% d. None of these answer choices are correct. 30) 29) Western Beef Department Store had net credit sales of $18,000,000 and cost of goods sold of $150,000,000 for the year. The average inventory for the year amounted to $22,500,000. The average number of days in inventory during the year was a. 365 days. b. 60.8 days. c. 55.3 days. d. 30 days. Ale Corporation had net income of $2,040,000 and paid dividends to common stockholders of $400,000 in 2020. The weighted average number of shares outstanding in 2020 was 600,000 shares. Ale Corporation's common stock is selling for $82 per share on the New York Stock Exchange. Ale Corporation's price-earnings ratio is a. 3.2 times. b. 16.0 times. C. 19 times. d. 12.7 times.

Answer 1

The correct answers are:

28. b. 69%

29. c. 55.3 days

30. Should be 24.12 ( which does not exist as one of the option)

Notes

28. Under Vertical analysis, all items of income statement are expressed as a percentage of Net Sales.

Cost of Goods Sold % = 2280/3300 = 69.09%

29. No. of days in inventory = Average Inventory*365/Cost of Goods Sold = 22,500,000*365/150,000,000 = 54.75

Since we dont have that option there, the nearest option is 55.3

30. Price Earnings ratio = Market Price per share/Earnings per share = 82/3.4 = 24.12

Earnings per share = Net Income/Weighted average no. of shares = 2040000/600000 = 3.4

Please comment in case of any issue and I will be happy to rectify it.