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(Solved) JERGAN CORPORATION Balance Sheets December 31 2017 2016 2015 Cash $30000 $20000 $18000 Accounts receivable (net) 50000 45000 48000 Other current


Condensed balance sheet and income statement data for Jergan Corporation are presented here. (attached)


Additional information:

  1. The market price of Jergan's common stock was $7.00, $7.50, and $8.50 for 2015, 2016, and 2017, respectively.
  2. You must compute dividends paid. All dividends were paid in cash.
Instructions

(a) Compute the following ratios for 2016 and 2017.

(1) Profit margin.

(2) Gross profit rate.

(3) Asset turnover.

(4) Earnings per share.

(5) Priceâearnings ratio.

(6) Payout ratio.

(7) Debt to assets ratio.

(b)  Based on the ratios calculated, discuss briefly the improvement or lack thereof in the financial position and operating results from 2016 to 2017 of Jergan Corporation.


Compute ratios; comment on overall liquidity and profitability.

JERGAN CORPORATION
Balance Sheets
December 31 2017 2016 2015 Cash $30000 $20000 $18000 Accounts receivable (net) 50000 45000 48000 Other current assets 90000 95000 64000 Investments 55000 70000 45000 Plant and equipment (net) 500000 370000 358000 $725000 $600000 $533000 Current liabilities $85000 $80000 $70000 Long term debt 145000 85000 50000 Common Stock $10 par 320000 310000 300000 Retained earnings 175000 125000 113000 $725000 $600000 $533000 JERGAN CORPORATION
Income statements
For the years ended December 31 2017 2016 Sales revenue $740000 $600000 Less: sales returns and allowances 40000 30000 Net sales 700000 570000 Cost of goods sold 425000 350000 Gross profit 275000 220000 Operating expenses (including income taxes) 180000 150000 Net income 95000 70000

 


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