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	191,000	158,000
Cost of Goods Sold	94,000	86,000
Selling & Administration Exp.	46,500	39,800
Interest Expense	9,000	10,200
Income Tax Expense	12,400	9,300
Net Income	29,100	12,700
Additional Data:
Total Assets	203,000	197,000	159,000
Common Stockholders' Equity	91,000	88,500	80,000
Preferred Dividends	2,300	2,400	0
Common Shares Outstanding	19,000	20,800	10,500

 

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 $0.65 per share.

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

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