Use the Following Information from the Current Year Financial Statements

question 107

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

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Definitions:

Holoblastic Cleavage

A cleavage pattern in which the entire embryo cleaves; characteristic of eggs with little or moderate yolk (isolecithal or moderately telolecithal) (e.g., the eggs of echinoderms, amphioxus, and mammals). Compare with meroblastic cleavage.

Meroblastic Cleavage

Cleavage pattern observed in the telolecithal eggs of reptiles and birds, in which cleavage is restricted to a small disc of cytoplasm at the animal pole. Compare with holoblastic cleavage.

Cleavage Pattern

The division of cells in the early embryo, determining the spatial arrangement of cells in the resulting organism.

Isolecithal Eggs

Eggs with a small amount of evenly distributed yolk, typically found in mammals including humans.