Use the Following Information from the Current Year Financial Statements

question 36

Essay

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.)
$\begin{array}{|l|r|}\hline\text { Income statement data: } & \\\hline \text { Sales (all on credit) } & \$ 1,075,000 \\\hline \text { Cost of goods sold } & 575,000 \\\hline \text { Gross profit on sales } & \$ 500,000\\\hline \text { Operating expenses } & 305,000 \\\hline \text { Operating income } & \$ 195,000 \\\hline \text { Interest expense } & 20,400 \\\hline \text { Income before taxes } & \$ 174,600 \\\hline \text { Income taxes } & 74,000 \\\hline \text { Net income } & \$ 100,600\\\hline\end{array}$ $\begin{array}{|l|r|}\hline\text { Balance sheet data: } & \\\hline \text { Cash } & \$ 38,400 \\\hline \text { Accounts receivable } & 120,000 \\\hline \text { Inventory } & 56,700 \\\hline \text { Prepaid Expenses } & 24,000 \\\hline \text { Total current assets } & \$ 239,100 \\\hline \text { Total plant assets } & 708,900 \\\hline \text { Total assets } & \$ 948,000 \\\hline \text { Accounts payable } & \$ 91,200 \\\hline \text { Interest payable } & 4,800 \\\hline \text { Long-term liabilities } & 204,000 \\\hline \text { Total liabilities } & \$ 300,000 \\\hline \text { Common stock, } \$ 10 \text { par } & 480,000 \\\hline \text { Retained earnings } & 168,000 \\\hline \text { Total liabilities and equity } & \$ 948,000 \\\hline\end{array}$

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Definitions:

Proton Spin Decoupled

A technique used in NMR spectroscopy where the coupling between proton spins is removed, simplifying the spectrum and making it easier to interpret.

Peaks

In analytical chemistry, refers to the points in a graph, spectrum, or chromatogram that represent a maximum concentration or abundance of a compound or component.

Compound

A substance formed from the chemical combination of two or more elements in a specific ratio, bonded together in a fixed structure.

Proton Spin Decoupled

A technique in nuclear magnetic resonance (NMR) spectroscopy where the interaction between proton spins is removed or reduced to simplify the spectrum and enhance structural elucidation.