Night Corporation Gathered the Following Data at the End of the Accounting

question 159

Essay

Night Corporation gathered the following data at the end of the accounting period, December 31, 20X4: $$\begin{array} { | l | r | } \hline \text { Profit } & \$ 60,000 \\\hline \text { Net sales revenue } & 1,200,000 \\\hline \text { Interest expense } & 25,000 \\\hline \text { Total liabilities } & 200,000 \\\hline \text { Shareholders' equity (50,000 shares outstanding) } & 300,000 \\\hline \text { Average income tax rate } & 40 \% \\\hline \text { Dividends declared and paid during 20X4 } & 22,500 \\\hline \text { Market price per share of stock at year end } & \$ 9.00 \\\hline\end{array}$$ (a) Based on the above information, prepare an analysis by computing the following: $\begin{array}{|c|l|}\hline \text { (1) } & \text { Profit margin: } \underline{\quad\quad}\% \\\hline \text { (2) } & \text { Return on equity: } \underline{\quad\quad}\% \\\hline \text { (3) } & \text { Earnings per share: } \$ \underline{\quad\quad} \\\hline \text { (4) } & \text { Dividend yield ratio: }\underline{\quad\quad}\% \\\hline \text { (5) } & \text { Price/earnings ratio: } \underline{\quad\quad}\\\hline \text { (6) } & \text { Return on assets: }\underline{\quad\quad}\% \\\hline \text { (7) } & \text { Financial leverage:} \underline{\quad\quad}\%\\\hline\end{array}$
(b) Your interpretation of the financial leverage is:

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Definitions:

Gingivitis

An inflammation of the gums, typically caused by a bacterial infection, which can lead to redness, swelling, and bleeding.

Deciduous Teeth

Also known as baby or milk teeth, these are the first set of teeth in human development, which are eventually replaced by permanent teeth.

Hepatic Portal Vein

A blood vein that carries nutrients from the gastrointestinal tract and spleen to the liver for processing.

Capillaries

The smallest blood vessels in the body's circulatory system, where the exchange of water, oxygen, carbon dioxide, and many other nutrients and waste substances between blood and tissues occurs.