Question

Condensed balance sheet and income statement data for Ayayai Corporation are presented here.

AYAYAI CORPORATION Balance Sheets December 31
		2017		2016		2015
Cash		$ 31,000		$ 21,000		$ 19,000
Accounts receivable (net)		51,000		46,000		49,000
Other current assets		92,000		97,000		66,000
Investments		57,000		72,000		47,000
Plant and equipment (net)		500,000		370,000		358,000
		$731,000		$606,000		$539,000
Current liabilities		$ 86,000		$ 81,000		$ 71,000
Long-term debt		147,000		87,000		52,000
Common stock, $10 par		322,000		312,000		302,000
Retained earnings		176,000		126,000		114,000
		$731,000		$606,000		$539,000

AYAYAI CORPORATION Income Statements For the Years Ended December 31
		2017		2016
Sales revenue		$742,000		$602,000
Less: Sales returns and allowances		41,000		31,000
Net sales		701,000		571,000
Cost of goods sold		427,000		352,000
Gross profit		274,000		219,000
Operating expenses (including income taxes)		181,000		151,000
Net income		$ 93,000		$ 68,000

Additional information:

1.		The market price of Ayayai’s common stock was $7.00, $7.50, and $8.50 for 2015, 2016, and 2017, respectively.
2.		You must compute dividends paid. All dividends were paid in cash.

(a) Compute the following ratios for 2016 and 2017.

		2017			2016
Profit margin			%			%
Gross profit rate			%			%
Asset turnover			times			times
Earnings per share		$			$
Price-earnings ratio			times			times
Payout ratio			%			%
Debt to assets ratio			%			%

Answer 1

	2017	2016
Profit Margin(Net Income/Net Sales)	13.27%	11.91%
Gross Profit rate(Gross Profit/Net Sales)	39.09%	38.35%
Asset Turnover(Net Sales / Average Total Assets)	1.05	1.00
Earnings per share(Net Income / No. of shares outstanding)	$2.89	$2.18
Price earning ratio(Price / EPS)	2.94	3.44
Retention Ratio(Retained earnigs/Total Shareholders equity)	35.34%	28.77%
Payout ratio	64.66%	71.23%
Debt Asset ratio(Total Liabilities/Total Assets)	31.87%	27.72%