The Following Income Statement and Balance Sheets for Laser World

question 152

Essay

The following income statement and balance sheets for Laser World are provided: $$\begin{array} { | l r | } \hline { \begin{array} { c } \text { Laser World } \\\text { Income Statement } \\\text { For the year-ended December 31 , 2012}\end{array} } \\\hline \text { Sales revenue } & \$ 2,200,000 \\\text { Cost of goods sold } & 1,500,000 \\\text { Gross profit } & 700,000 \\\text { Expenses: } & \\\text { Operating expenses } & 350,000 \\\text { Depreciation expense } & 70,000 \\\text { Loss on sale of land } & 5,000 \\\text { Interest expense } & 25,000 \\\text { Income tax expense } & 60,000 \\\text { Total expenses } & 510,000 \\\hline \text { Net income } & \$ 190,000 \\\hline\end{array}$$ Earnings per share for the year-ended December 31, 2012, is $1.90. The closing stock price on December 31, 2012, is $30.40.
Calculate the following profitability ratios for 2012: $\begin{array}{ll}\text { 1. Gross profit ratio } & \text { 4. Asset turnover } \\\text { 2. Return on assets } & \text { 5. Return on equity } \\\text { 3. Profit margin } & \text { 6. Price-earnings ratio }\end{array}$

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Definitions:

Continuous

Something that occurs without interruption, in automotive terms, can refer to processes or systems that operate unceasingly.

Active

Refers to something currently in operation or in use.

Nonintrusive

A term describing techniques or methods that do not require physical alteration or penetration of a system or object to assess or interact with it.

Monitor

To observe and check the progress or quality of something over a period, often through the use of instruments or sensors.