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Question
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 has a simple capital structure, with only 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) | $1,075,000 |
| Cost of goods sold | 575,000 |
| Gross profit on sales | $ 500,000 |
| Operating expenses | 305,000 |
| Operating income | $ 195,000 |
| Interest expense | 20,400 |
| Income before taxes | $ 174,600 |
| Income taxes | 74,000 |
| Net income | $ 100,600 |
| Balance sheet data: | |
| Cash | $ 38,400 |
| Accounts receivable | 120,000 |
| Inventory | 56,700 |
| Prepaid Expenses | 24,000 |
| Total current assets | $239,100 |
| Total plant assets | 708,900 |
| Total assets | $948,000 |
| Accounts payable | $ 91,200 |
| Interest payable | 4,800 |
| Long-term liabilities | 204,000 |
| Total liabilities | $300,000 |
| Common stock, $10 par | 480,000 |
| Retained earnings | 168,000 |
| Total liabilities and equity | $948,000 |
Answer
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