Packers Corporation Reported the Following Data for the Year EndedCalculate Each of the Following Ratios:
A

Question

Packers Corporation Reported the Following Data for the Year EndedCalculate Each of the Following Ratios: 
A

Examlex · Accepted Answer

The Answer is To calculate the financial ratios for Packers Corporation, we will use the provided data. Here's how each ratio is calculated:

A. Profit Margin
The profit margin ratio measures how much net income is generated for each dollar of sales. It is calculated as:

ext{Profit Margin} = \frac{ ext{Net Income}}{ ext{Net Sales Revenue}}

ext{Profit Margin} = \frac{\$25,000}{\$400,000} = 0.0625 ext{ or } 6.25\%

B. Return on Assets (ROA)
The return on assets ratio indicates how efficiently a company uses its assets to generate profit. It is calculated as:

ext{Return on Assets} = \frac{ ext{Net Income}}{ ext{Average Total Assets}}

ext{Return on Assets} = \frac{\$25,000}{\$200,000} = 0.125 ext{ or } 12.5\%

C. Return on Equity (ROE)
The return on equity ratio measures the return generated on the shareholders' equity. It is calculated as:

ext{Return on Equity} = \frac{ ext{Net Income}}{ ext{Average Stockholders' Equity}}

ext{Return on Equity} = \frac{\$25,000}{\$160,000} = 0.15625 ext{ or } 15.625\%

D. Earnings Per Share (EPS)
Earnings per share is the portion of a company's profit allocated to each outstanding share of common stock. It is calculated as:

ext{Earnings Per Share} = \frac{ ext{Net Income}}{ ext{Average Shares of Common Stock Outstanding}}

ext{Earnings Per Share} = \frac{\$25,000}{15,000} = \$1.67

E. Price/Earnings Ratio (P/E)
The price/earnings ratio compares a company's current share price to its earnings per share. It is calculated as:

ext{Price/Earnings Ratio} = \frac{ ext{Market Value per Share}}{ ext{Earnings Per Share}}

ext{Price/Earnings Ratio} = \frac{\$16.00}{\$1.67} \approx 9.58

F. Debt-to-Equity Ratio
The debt-to-equity ratio measures the relative proportion of shareholders' equity and debt used to finance a company's assets. However, we do not have the total debt provided in the data, so we cannot calculate this ratio with the given information.

G. Financial Leverage Percentage
Financial leverage percentage is a measure of how much a company is using debt to finance its assets relative to equity. Like the debt-to-equity ratio, we cannot calculate this without the total debt information.

H. Fixed Asset Turnover Ratio
The fixed asset turnover ratio measures how effectively a company uses its fixed assets to generate sales. It is calculated as:

ext{Fixed Asset Turnover Ratio} = \frac{ ext{Net Sales Revenue}}{ ext{Average Net Fixed Assets}}

ext{Fixed Asset Turnover Ratio} = \frac{\$400,000}{\$100,000} = 4.0

These are the calculated ratios based on the provided data. For the ratios that require debt information (F and G), additional data would be needed to perform the calculations.

Packers Corporation Reported the Following Data for the Year Ended

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Packers Corporation Reported the Following Data for the Year Ended

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Correct Answer:
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