Answer To Accounting Question IFS Test No 2 On Interpretation of Financial Statements
Answer to Accounting Test Question IFS No 2: 1(a) Profit margin on sales = Net Income/ Net Sales = $340,000/$7,050,000 = 4.8%
1(b) Return on Assets (ROA) = Net Income/(Average Total Assets)/2 =$340,000/($4,430,000+3,990,000)/2 = 8.1% 1(c) Return on Shareholders’ equity = Net Income/ (Average Total Shareholder fund)/2 =$340,000/($3,170,000+2,360,000)/2 =12.3%
(1) Computation of Dividend paid during Year 2005: Retained earnings beginning of year 2005 $860,000 Add: Net Income $340,000 Less: Retained earnings end of year 2005 ($970,000) Dividends paid during 2005 $230,000
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