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.)
Income Statement data:
Sales (all on credit)……………………………… $1,075,000
Cost of goods sold…………………………… 575,000
Gross profits on sales…………………………..500,000
Operating expenses……………………………. 305,000
Operating income……………………………….. 195,000
Interest expense…………………………………. 20,400
Income before taxes……………………………. 174,600
Income taxes………………………………………. 74,000
Net income…………………………………………. 100,600
Balance sheet data:
Cash…………………………………………………….. $ 38,400
Accounts Receivable…………………………… 120,000
Inventory…………………………………………….. 56,700
Prepaid Expenses………………………………… 24,000
Total current assets…………………………….. 239,100
Total plant assets……………………………….. 708,900
Total assets…………………………………………. 948,000
Accounts payable……………………………….. 91,200
Interest payable………………………………… 4,800
Long term liabilities……………………………. 204,000
Total Liabilities……………………………………. 300,000
Common stock, $10 par……………………….. 480,000
Retained earnings…………………………………. 168,000
Total liabilities and equity…………………….. 948,000