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	192,000	154,000
Cost of Goods Sold	96,000	86,000
Selling & Administration Exp.	46,900	40,000
Interest Expense	9,800	10,900
Income Tax Expense	11,000	9,000
Net Income	28,300	8,100
Additional Data:
Total Assets	205,000	198,000	163,000
Common Stockholders' Equity	94,000	85,500	79,000
Preferred Dividends	1,900	1,600	0
Common Shares Outstanding	19,300	20,200	10,300

 

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