Selected data from the financial statements of Italian Marble Co. and Brazil Stone Products for the year just ended follow. Assume that for both companies dividends declared were equal in amount to net earnings during the year and therefore stockholders' equity did not change. The two companies are in the same line of business.
|
Italian
Marble Co. |
Brazil Stone Products |
| Total liabilities |
$ |
200,000 |
|
$ |
100,000 |
|
| Total assets |
|
800,000 |
|
|
400,000 |
|
| Sales (all on credit) |
|
1,960,000 |
|
|
1,150,000 |
|
| Average inventory |
|
240,000 |
|
|
140,000 |
|
| Average receivables |
|
200,000 |
|
|
100,000 |
|
| Gross profit as a percentage of sales |
|
40 |
% |
|
30 |
% |
| Operating expenses as a percentage of sales |
|
36 |
% |
|
25 |
% |
| Net income as a percentage of sales |
|
3 |
% |
|
5 |
% |
|
| a. |
Compute the net income for each company.
|