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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:

Adult Socialization

The process through which adults learn and internalize the norms, values, and behaviors that are necessary for functioning in their society or specific groups.

Childhood

The period in human life from birth to adolescence, characterized by growth, development, and learning in a family, social, and cultural context.

Agents of Socialization

Individuals, groups, and institutions that play a significant role in integrating individuals into society by teaching social norms, values, behaviors, and skills.

Socializes

The process by which individuals learn to adopt the behavior patterns of the community or society they live in, acquiring its culture and norms.