Carlo Works, Inc.’s comparative income statement follows. Use this information to calculate the following ratios.

Carlo Works, Inc.
Comparative Income Statement
For Years Ending Dec. 31, 2020 and 2019

	2020	2019	2018
Net Sales	188,000	161,000
Cost of Goods Sold	95,000	87,000
Selling & Administration Exp.	46,100	40,900
Interest Expense	9,400	10,700
Income Tax Expense	10,600	9,000
Net Income	26,900	13,400
Additional Data:
Total Assets	204,000	184,000	165,000
Common Stockholders' Equity	93,000	88,500	79,000
Preferred Dividends	2,200	1,700	0
Common Shares Outstanding	19,400	20,200	11,000

 

1. Calculate the profit margin ratio for 2020 and 2019.

 ` (` Net income `)`  `/`   `(` Net Sales `)` `=`  Profit margin ratio

2020: `(`  `$`   `)`  `/`   `(` `$`  `)` `=`  `%` 

2019: `(`  `$`  `)`  `/`   `(` `$`  `)` `=`  `%` 

2. Calculate the rate of return on total assets for 2020 and 2019.

 ` (` Net income `+`  Interest expense `)`  `/`  `(` Average total assets `)` `=`  Rate of return on total assets

2020: `(`  `$`  `+`  `$`  `)`  `/`  `(` `$`  `)` `=` `%` 

2019: `(`  `$`  `+`  `$`  `)`  `/`  `(` `$`  `)` `=` `%` 

3. Calculate the asset turnover ratio for 2020 and 2019.

 ` (` Net sales `)`  `/`   `(` Average total assets `)` `=`  Asset turnover ratio

2020: `(`  `$`  `)`  `/`   `(` `$`  `)` `=` 

2019: `(`  `$`  `)`  `/`   `(` `$`  `)` `=` 

4. Calculate the rate of return on common stockholders’ equity for 2020 and 2019.

 ` (` Net income `-`  Preferred Dividends `)`  `/`  `(` Average Common Stockholders Equity `)` `=`  Rate of Return on Common Stockholders Equity

2020: `(`  `$`  `-`  `$`  `)`  `/`  `(` `$`  `)` `=` `%` 

2019: `(`  `$`  `-`  `$`  `)`  `/`  `(` `$`  `)` `=` `%` 

5. Calculate the earnings per share for 2020 and 2019.

 ` (` Net income `-`  Preferred Dividends `)`  `/`  `(` Weighted average number of common shares outstanding `)` `=`  Earnings per share

2020: `(`  `$`  `-`  `$`  `)`  `/`  `(`   `)` `=` `$` 

2019: `(`  `$`  `-`  `$`  `)`  `/`  `(`   `)` `=` `$` 

6. Calculate the 2020 dividend payout on common stock. Assume dividends per share for common stock are equal to $0.55 per share.

 ` (` Annual dividend per share `)`  `/`   `(` Earnings per share `)` `=`  Dividend payout

2020: `(`  `$`  `)`  `/`   `(` `$`  `)` `=`  `%`