Espinola Corporation's most recent balance sheet and income statement appear below:
BALANCE SHEETS
2006 2005
ASSETS
Cash & equivalents $320,000 $180,000
Accounta receivable 220,000 240,000
Inventory 140,000 130,000
Prepaid expenses 20,000 20,000
Total current assets 700,000 570,000
Plant & equipment, net 860,000 920,000
Total Assets $1,560,000 $1,490,000
LIABILITIES & EQUITIES
Accounts payable $200,000 $170,000
Accrued payable 80,000 80,000
Notes payable, current 40,000 40,000
Total current liabilities 320,000 290,000
Bonds payable 210,000 220,000
Total liabilities 530,000 510,000
Preferred stock, $100 par value, 5% 100,000 100,000
Common stock, $1 par value 100,000 100,000
Additional paid in capital, common stock 150,000 150,000
Retained earnings 680,000 630,000
Total equities 1,030,000 980,000
Total liabilities & equities $1,560,000 $1,490,000
INCOME STATEMENT
2006
Sales $1,220,000
Cost of goods sold 790,000
Gross margin 430,000
Selling & Admin expense 268,000
Net operating income 162,000
Interest expense 26,000
Income before tax 136,000
Income tax 41,000
Net income 95,000
Dividends paid, preferred 5,000
Net income for common shareholders 90,000
Dividends paid, common 40,000
Net income added to retained earnings 50,000
Beginning retained earnings 630,000
Ending retained earnings $680,000
Other:
Market value of stock end of year $12.87
Tax rate 30%
Bond interest 10%
Return demanded on preferred stock 10%
Return demanded on common stock 14%
Required compute the following for 2006 :
a. Gross margin percentage.
b. Earnings per share (of common stock).
c. Price-earnings ratio.
d. Dividend payout ratio.
dividend per share
dividend payout ratio
e. Dividend yield ratio.
f. Return on total assets.
after tax cost of interest
average total assets
return on total assets
g. Return on common stockholders' equity.
average stockholders equity
average preferred stock
return on equity
h. Book value per share.
i. Working capital.
j. Current ratio.
k. Acid-test ratio.
l. Accounts receivable turnover.
m. Average collection period (days).
n. Inventory turnover.
o. Average sale period (days).
p. Times interest earned.
q. Debt-to-equity ratio.
r. Show that financial leverage is positive or negative.