Use the information for Purrfect Pets below to calculate each of the required numbers. Assume that expenses include taxes and the company has no other sources of revenue.

Use the information for Purrfect Pets below to calculate each of the required numbers. Assume that expenses include taxes and the company has no other sources of revenue.

 

December 31, 2012					December 31, 2011
Total Assets	$	257,300			Total Assets	$	201,600
Contributed Capital		96,200			Contributed Capital		64,100
Retained Earnings		55,900			Retained Earnings		44,700

 

During the period 1/1/12 to 12/31/12					During the period 1/1/11 to 12/31/11
Sales Revenue	$	185,500			Sales Revenue	$	167,400
Expenses		140,200			Expenses		119,200

 

a.	Determine the debt-to-assets ratio for the company as of December 31, 2011 and December 31, 2012. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

 

	December 31, 2011	December 31, 2012
Debt-to-assets ratio	%	%

 

b.	Determine the asset turnover ratio for the company during the year 2012. (Round your answer to 2 decimal places.)

 

Asset turnover ratio

 

c.	Determine the net income for the company for 2011 and 2012. (Omit the "$" sign in your response.)

 

	2011	2012
Net income	$	$

 

d.	Determine the net profit margin ratio for the company for 2011 and 2012. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

 

	2011	2012
Net profit margin ratio	%	%

Explanation: a.

Debt-to-assets ratio:

December 31, 2011

SE = CC + RE SE = $64,100 + $44,700 = $108,800

A = L + SE

$201,600 = L + $108,800

$201,600 – $108,800 = L

$92,800 = L

Debt-to-Assets Ratio = L ÷ A

Debt-to-Assets Ratio = $92,800 ÷ $201,600 = .4603 or 46.03%

December 31, 2012

SE = CC + RE

SE = $96,200 + $55,900 = $152,100

A = L + SE

$257,300 = L + $152,100

$257,300 – $152,100= L

$105,200 = L

Debt-to-Assets Ratio = L ÷ A

Debt-to-Assets Ratio = $105,200 ÷ $257,300 = .4089 or 40.89%

b.

Asset turnover ratio:

Average Total Assets = (Beginning Total Assets + Ending Total Assets) ÷ 2

Average Total Assets = ($201,600 + $257,300) ÷ 2 = $458,900 ÷ 2 = $229,450

Asset Turnover Ratio = 2008 Sales Revenue ÷ Average Total Assets

Asset Turnover Ratio = $185,500 ÷ $229,450 = .81.

c.

Net income for the company for 2011 and 2012:

2011

Net Income = Revenues – Expenses

Net Income = $167,400 – $119,200 = $48,200

2012

Net Income = Revenues – Expenses

Net Income = $185,500 – $140,200 = $45,300

d.

Net profit margin ratio:

2011

Net Profit Margin ratio = Net Income ÷ Sales Revenue

Net Profit Margin ratio = $48,200 ÷ $167,400 = .2879 or 28.79%

2012

Net Profit Margin ratio = Net Income ÷ Sales Revenue

Net Profit Margin ratio = $45,300 ÷ $185,500 = .2442 or 24.42%