Prepare a partial income statement starting with income

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Reference no: EM13500402

Below are ratios for two companies which operate in the same industry.

 

Company A

Company B

P/E

27.8

63.0

Gross profit margin

59.1

66.2

Profit Margin

8.6

13.1

Quick

.8

0.5

Current

1.2

0.65

Debt-to-equity

.45

0.78

Return on equity

29.0

26.9

Return on assets

16.8

28.2

Dividend yield

1.7

1.2

Dividend payout

44.0

67.0

Required:

Evaluate the companies as a potential investment based on the given ratios.

In 2011, Jeffrey Company disposed of a segment of its business and incurred a pretax loss on the disposal of $40,000. In the same year, a flood caused $15,000 of damages to the building. The flood damage qualified as an extraordinary item. Income from continuing operations before taxes was $100,000 for 2011 and the 20 percent tax rate applied to all of the items above. Prepare a partial income statement starting with income from continuing operations before taxes for the year 2011 and concluding with net income.

Reference no: EM13500402

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