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Tue 25 Mar, 2014 08:12 pm
Liz Marett is the chief financial officer for Fulton Restaurants. She delivered the following comments in a recent conference call with analysts that follow the company:
"20X5 was another excellent year. Net income was a record setting $10,000,000. Food Revenue reflected 60% of total revenue with the remainder being beverage and other. We maintained our overall profit margin at the historic 10% level. This occurred despite an increase in food costs that lowered our food department gross profit to 55%. We are proud that we continue to maintain a healthy balance sheet that is free of any liabilities. All of our financing continues to be provided by our common and preferred shareholders. Our beginning of year equity of $75,000,000 was sufficient to fund our capital needs, and no additional shares were issued this year. Our shareholders have again received their full $2,000,000 in dividends for the year. The remaining earnings have been reinvested in the company."
Use Profitability ratios to determine Fulton's:
a) Total Sales
b) Food Revenue
c) Food Cost of Goods Sold
d) Net Income
@SarahMichelle22,
What did you get for your answers?
Then we can compare.
@chai2,
I don't have any answers. I don't even know where to begin. I am so lost.
@SarahMichelle22,
Do you use tee accounts? Start at the top and construct your financials. Use what you've to determine what you are missing.
@SarahMichelle22,
If Net Income of 10 mil resulted in an overall profit margin of 10%, then Sales must have been 100 mil. If 60% of revenue was in Food, then food revenue was 60 mil, and food gross profit was 33 mil, or 55%.