The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $68 on December 31, 2012.
| Blige Inc. | ||||
| Comparative Retained Earnings Statement | ||||
| For the Years Ended December 31, 2012 and 2011 | ||||
| 2012 | 2011 | |||
| Retained earnings, January 1 | $2,322,400 | $1,952,800 | ||
| Add net income for year | 525,600 | 400,000 | ||
| Total | $2,848,000 | $2,352,800 | ||
| Deduct dividends: | ||||
| On preferred stock | $8,400 | $8,400 | ||
| On common stock | 22,000 | 22,000 | ||
| Total | $30,400 | $30,400 | ||
| Retained earnings, December 31 | $2,817,600 | $2,322,400 | ||
| Blige Inc. | ||||
| Comparative Income Statement | ||||
| For the Years Ended December 31, 2012 and 2011 | ||||
| 2012 | 2011 | |||
| Sales | $2,965,785 | $2,728,500 | ||
| Sales returns and allowances | 14,760 | 9,590 | ||
| Net sales | $2,951,025 | $2,718,910 | ||
| Cost of goods sold | 1,131,500 | 1,040,980 | ||
| Gross profit | $1,819,525 | $1,677,930 | ||
| Selling expenses | $581,740 | $727,480 | ||
| Administrative expenses | 495,555 | 427,250 | ||
| Total operating expenses | 1,077,295 | 1,154,730 | ||
| Income from operations | $742,230 | $523,200 | ||
| Other income | 39,070 | 33,400 | ||
| $781,300 | $556,600 | |||
| Other expense (interest) | 184,000 | 101,600 | ||
| Income before income tax | $597,300 | $455,000 | ||
| Income tax expense | 71,700 | 55,000 | ||
| Net income | $525,600 | $400,000 | ||
| Blige Inc. | |||||
| Comparative Balance Sheet | |||||
| December 31, 2012 and 2011 | |||||
| Dec. 31, 2012 | Dec. 31, 2011 | ||||
| Assets | |||||
| Current assets: | |||||
| Cash | $593,500 | $498,790 | |||
| Temporary investments | 898,280 | 826,560 | |||
| Accounts receivable (net) | 554,800 | 518,300 | |||
| Inventories | 408,800 | 321,200 | |||
| Prepaid expenses | 112,284 | 99,760 | |||
| Total current assets | $2,567,664 | $2,264,610 | |||
| Long term investments | 1,828,016 | 981,833 | |||
| Property, plant, and equipment (net) | 2,530,000 | 2,277,000 | |||
| Total assets | $6,925,680 | $5,523,443 | |||
| Liabilities | |||||
| Current liabilities | $778,080 | $901,043 | |||
| Long term liabilities: | |||||
| Mortgage note payable, 8%, due 2017 | $1,030,000 | $0 | |||
| Bonds payable, 8%, due 2021 | 1,270,000 | 1,270,000 | |||
| Total long term liabilities | $2,300,000 | $1,270,000 | |||
| Total liabilities | $3,078,080 | $2,171,043 | |||
| Stockholders’ Equity | |||||
| Preferred $0.70 stock, $40 par | $480,000 | $480,000 | |||
| Common stock, $10 par | 550,000 | 550,000 | |||
| Retained earnings | 2,817,600 | 2,322,400 | |||
| Total stockholders’ equity | $3,847,600 | $3,352,400 | |||
| Total liabilities and stockholders’ equity | $6,925,680 | $5,523,443 | |||
Instructions:
Determine the following measures for 2012, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Assume 365 days a year.
| 1. Working capital: | $ | |
| 2. Current ratio: | ||
| 3. Quick ratio: | ||
| 4. Accounts receivable turnover: | ||
| 5. Number of days’ sales in receivables: | ||
| 6. Inventory turnover: | ||
| 7. Number of days’ sales in inventory: | ||
| 8. Ratio of fixed assets to long term liabilities: | ||
| 9. Ratio of liabilities to stockholders’ equity: | ||
| 10. Number of times interest charges are earned: | ||
| 11. Number of times preferred dividends earned: | ||
| 12. Ratio of net sales to assets: | ||
| 13. Rate earned on total assets: | % | |
| 14. Rate earned on stockholders’ equity: | % | |
| 15. Rate earned on common stockholders’ equity: | % | |
| 16. Earnings per share on common stock: | $ | |
| 17. Price earnings ratio: | ||
| 18. Dividends per share of common stock: | $ | |
| 19. Dividend yield: | % |