Business, 29.01.2021 16:20 savannahwonder

Your boss has asked you to calculate the profitability ratios of Cold Goose Metal Works, Inc. and make comments on its second-year performance as compared to its first-year performance. The following shows Cold Goose's income statement for the last two years. The company had assets of $7,050,000 in the first year and $11,277,600 in the second year. Common equity was equal to $3,750,000 in the first year, 100% of earnings were paid out as dividends in the first year, and the firm did not issue new stock in the second year. Net Sales $3,810,000 $3,000,000
Operating costs less depreciation and amortization 1365000 1,267,500
Depreciation and amortization $190,500 $120,000
Total Operating Costs 1,555,500 1,387,500
Operating Income (or EBIT) $225,450 $1,612,500
Less: Interest 225,450 169,313
Earnings before taxes (EBT) $2,029,050 $1,443,187
Less: Taxes (40%) 821,620 577,275
Net Income $1,217,430 $865,912

Required:
Calculate the profitability ratios of Cold Goose Metal Works, Inc.

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