Use the following information from the current year financial statements of a company to calculate the ratios below:(a) Current ratio.(b) Accounts receivable turnover. (Assume the prior year's accounts receivable balance was $100,000.)(c) Days' sales uncollected.(d) Inventory turnover. (Assume the prior year's inventory was $50,200.)(e) Times interest earned ratio.(f) Return on common stockholders' equity. (Assume the prior year's common stock balance was $480,000 and the retained earnings balance was $128,000.)(g) Earnings per share (assuming the corporation only has common stock outstanding).(h) Price earnings ratio. (Assume the company's stock is selling for $26 per share.)(i) Divided yield ratio. (Assume that the company paid $1.25 per share in cash dividends.)Income statement
data:?Sales (all on credit) $1,075,000Cost of goods sold 575,000Gross profit on sales $ 500,000Operating expenses305,000Operating income$ 195,000Interest expense 20,400Income before taxes$ 174,600Income taxes 74,000Net income$ 100,600??Balance sheet data:?Cash$ 38,400Accounts receivable120,000Inventory56,700Prepaid Expenses 24,000Total current assets$ 239,100Total plant assets708,900Total assets$ 948,000Accounts payable$ 91,200Interest payable4,800Long-term liabilities 204,000Total liabilities$ 300,000Common stock, $10 par480,000Retained earnings168,000Total liabilities and equity$ 948,000
What will be an ideal response?
(a)
| Cash | $ 38,400 |
| Accounts receivable | 120,000 |
| Inventory | 56,700 |
| Prepaid expenses | 24,000 |
| Total current assets | $239,100 |
| Accounts payable | $91,200 |
| Interest payable | 4,800 |
| Total current liabilities | $96,000 |
Current ratio = $239,100/$96,000 = 2.5 to 1
(b) Accounts receivable turnover =
$1,075,000/[$120,000 + $100,000)/2] = 9.8 times
(c) Days' sales uncollected = ($120,000/$1,075,000) * 365 = 40.7 days
(d) Inventory turnover = $575,000/[($56,700 + $50,200)/2] = 10.8 times
(e) Times interest earned = $195,000/$20,400 = 9.6 times
(f)
| ? | Beginning | Ending |
| Common stock | $480,000 | $480,000 |
| Retained earnings | 128,000 | 168,000 |
| Total equity | $608,000 | $648,000 |
Return on common stockholders' equity =
$100,600/[($608,000 + $648,000)/2] = 16%
(g) Number of shares of common stock = $480,000/$10 par = 48,000 shares
Earnings per share = $100,600/48,000 shares = $2.10
(h) Price earnings ratio = $26/$2.10 = 12.4
(i) Dividend yield ratio = $1.25/$26 = 4.8%
You might also like to view...
On January 1, 2016, Lefty, Inc purchased a machine for $6,000. The estimated life and residual value were five years and $150, respectively. The machine will produce approximately 80,000 units over its life. In 2016 and 2017, the machine produced 10,000 and 15,000 units, respectively. In 2017, Lefty recorded $1,440 of depreciation expense. The depreciation method in use was the
A) activity method B) sum-of-the-years'-digits method C) double-declining-balance method D) straight-line method
A hospital's biomedical repair shop uses a 4-week periodic system to maintain the inventory on the blood pressure cuff repair parts
They use an average 40 adult arm cuffs with a standard deviation of 6 cuffs every 4 weeks. Cuffs aren't the most critical item they carry, but the manager would like to avoid the embarrassment of a stockout at least 95% of the time. What should their restocking level be? A) 40 cuffs B) 46 cuffs C) 50 cuffs D) 52 cuffs
What Major themes that can be addressed in lectures or class discussions
What will be an ideal response?
Hanna intends to give her granddaughter, Melodee, her antique hat pin. This heirloom has been kept under lock and key in the wall vault in the library of Hanna's house in Virginia. The hat pin is currently the only item in the vault. When Hanna is visiting Melodee in Connecticut, Hanna gives Melodee the only key to the vault. Melodee is grateful for the present and excitedly accepts. In this situation has there been a completed gift?
A. No. There has been no physical delivery of the hat pin. B. Yes. There has been physical delivery of the hat pin. C. No. There has only been constructive delivery of the hat pin. D. Yes. There has been constructive delivery of the hat pin.