Use the Following Information from the Current Year Financial Statements

question 71

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:

Diversity

The inclusion of individuals from a variety of backgrounds, perspectives, and abilities, valued for enhancing creativity and innovation in the workplace.

Competitive Advantage

The ability to outperform one’s competitors due to a core competency that is difficult to copy or imitate.

Work Ethic

A set of values based on the virtues of hard work and diligence, emphasizing the importance of staying dedicated and committed to one's job.

Employment Equity Act

Legislation aimed at promoting equitable representation across all levels of employment, through the elimination of discrimination.