Calculate the profit margin for the company

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Reference no: EM132040212

Use the following information to answer questions : Bayside Inc. 2005 Income Statement ($ in thousands) Net sales $5,680 Less: Cost of goods sold 4,060 Less:

Depreciation 420 Earnings before interest and taxes 1,200 Less: Interest paid 30 Taxable Income $1,170 Less: Taxes 410 Net income $ 760 Bayside, Inc. 2004 and 2005 Balance Sheets ($ in thousands) 2004 2005 2004 2005 Cash $ 70 $ 180 Accounts payable $1,350 $1,170 Accounts rec. 980 840 Long-term debt 720 500 Inventory 1,560 1,990 Common stock 3,200 3,500 Total $2,610 $3,010 Retained earnings 940 1,200 Net fixed assets 3,600 3,360 Total assets $6,210 $6,370 Total liabilities & equity $6,210 $6,370 Calculate the following: for 2005 only (You will show your work and put it in the drop box).

Additional Information at the end of 2005: Fair Market Value of the Stock $190 per share Number of Common Shares Outstanding 100,000 Dividends paid during 2005 - $4 per share

1) The ratio reflects that the company has used more debt than equity to finance the growth of the company. ? YES OR NO ?

2) Calculate the Profit Margin for the company?

3) Explain this Profit Margin Percentage. What does it mean?

4) Calculate the Earnings Per Share for the company. (Net Income/Oustanding Shares)

5) Calculate the Price to Earnings Ratio?

6)If the industry Price to Earnings ratio is at 15, what could account for the difference from the industry average?

Reference no: EM132040212

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