Task: 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