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	194,000	157,000
Cost of Goods Sold	93,000	89,000
Selling & Administration Exp.	45,000	39,600
Interest Expense	9,200	10,000
Income Tax Expense	12,000	9,300
Net Income	34,800	9,100
Additional Data:
Total Assets	214,000	190,000	162,000
Common Stockholders' Equity	90,000	88,500	79,000
Preferred Dividends	1,600	1,700	0
Common Shares Outstanding	19,700	20,800	10,200

 

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 $0.75 per share.

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

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