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Financial Statements for AAR Company Appear Below AAR Company Paid Dividends of $3

question 31

Essay

Financial statements for AAR Company appear below:
$Financial statements for AAR Company appear below: \begin{array}{|l|r|} \hline&\text {AAR Company}\\ &\text {Income Statemen}\\ &\text {For the Year Ended December 31, Year}\\ &2\\ &\text {(dollars in thousands)}\\ \hline \text { Sales (All on Account) } & \$ 2100000 \\ \hline \text { Costs of Goods Sold } & \$ 1770000 \\ \hline \text { Gross Margin } & \$ 330000 \\ \hline \text { Operating Expenses } & \$ 130000 \\ \hline \text { Net Operating Income } & \$ 200000 \\ \hline \text { Interest Expense } & \$ 50000 \\ \hline \text { Net Income before Taxes } & \$ 150000 \\ \hline \text { Income Taxes }(30 \%) & \$ 45000 \\ \hline \text { Net Income } & \$ 105000\\ \hline \end{array} AAR Company paid dividends of $3.15 per share during the year.The market price of the company's common shares at December 31 was $63 per share.Total assets at the beginning of the year were $1,100,000,and total shareholders' equity was $725,000.The balance of accounts receivable at the beginning of the year was $150,000.The balance in inventory at the beginning of the year was $250,000. Required: Calculate the following: a)Current ratio. b)Acid-test (quick)ratio. c)Average collection period (age of receivables). d)Inventory turnover. e)Times interest earned. f)Debt-to-equity ratio. g)Dividend payout ratio. h)Price-earnings ratio. i)Return on total assets. j)Return on common shareholders' equity. k)Was financial leverage positive or negative for the year? Explain.$
$\begin{array}{|l|r|}\hline&\text {AAR Company}\\&\text {Income Statemen}\\&\text {For the Year Ended December 31, Year}\\&2\\&\text {(dollars in thousands)}\\\hline \text { Sales (All on Account) } & \$ 2100000 \\\hline \text { Costs of Goods Sold } & \$ 1770000 \\\hline \text { Gross Margin } & \$ 330000 \\\hline \text { Operating Expenses } & \$ 130000 \\\hline \text { Net Operating Income } & \$ 200000 \\\hline \text { Interest Expense } & \$ 50000 \\\hline \text { Net Income before Taxes } & \$ 150000 \\\hline \text { Income Taxes }(30 \%) & \$ 45000 \\\hline \text { Net Income } & \$ 105000\\\hline\end{array}$

AAR Company paid dividends of $3.15 per share during the year.The market price of the company's common shares at December 31 was $63 per share.Total assets at the beginning of the year were $1,100,000,and total shareholders' equity was $725,000.The balance of accounts receivable at the beginning of the year was $150,000.The balance in inventory at the beginning of the year was $250,000.
Required:
Calculate the following:
a)Current ratio.
b)Acid-test (quick)ratio.
c)Average collection period (age of receivables).
d)Inventory turnover.
e)Times interest earned.
f)Debt-to-equity ratio.
g)Dividend payout ratio.
h)Price-earnings ratio.
i)Return on total assets.
j)Return on common shareholders' equity.
k)Was financial leverage positive or negative for the year? Explain.

Definitions:

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