Given the financial statements for Jones Corporation and Smith Corporation:

award:
1 out of
1.00 point
Frantic Fast Foods had earnings after taxes of $1140000 in the year 2012 with 316000 shares outstanding. On January 1 2013 the firm issued 31000 new shares. Because of the proceeds from these new shares and other operating improvements earnings after taxes increased by 26 percent.
a. Compute earnings per share for the year 2012. (Round your answer to 2 decimal places.)
b. Compute earnings per share for the year 2013. (Round your answer to 2 decimal places.)
Earnings per share $ 3.61 1%
Earnings per share $ 4.14 1%
award:
1 out of
1.00 point
Hillary Swank Clothiers had sales of $442000 and cost of goods sold of $326000.
a. What is the gross profit margin (ratio of gross profit to sales)? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. If the average firm in the clothing industry had a gross profit of 36 percent how is the firm doing?
award:
1 out of
point
A-Rod Fishing Supplies had sales of $2460000 and cost of goods sold of $1310000. Selling and administrative expenses represented 14 percent of sales. Depreciation was 12 percent of the total assets of
$4930000.
What was the firms operating profit?
Gross profit $ 1150000
Selling and administrative expense 344400
Depreciation expense 591600
award:
2 out of
points
Given the following information prepare in good form an income statement for the Dental Drilling Company.
(Input all amounts as positive values.)
Selling and administrative expense $ 108000
Depreciation expense 73000
Sales 551000
Interest expense 48000
Cost of goods sold 180000
Taxes 53000
Selling and administrative expense $ 108000
Depreciation expense 73000
Sales 551000
Interest expense 48000
Cost of goods sold 180000
Taxes 53000
award:
2 out of
2.00 points
Given the following information prepare in good form an income statement for Jonas Brothers Cough Drops. (Input all amounts as positive values.)
Selling and administrative expense $ 289000
Depreciation expense 193000
Sales 1720000
Interest expense 123000
Cost of goods sold 508000
Taxes 168000
Selling and administrative expense $ 289000
Depreciation expense 193000
Sales 1720000
Interest expense 123000
Cost of goods sold 508000
Taxes 168000
Cost of goods sold 508000
Gross profit $ 1212000 .1%
Operating profit $ 730000 .1%
Taxes 168000
Earnings after taxes $ 439000 .1%
award:
2 out of
2.00 points
Stein Books Inc. sold 1500 finance textbooks for $200 each to High Tuition University in 2013. These books cost
$160 to produce. Stein Books spent $12200 (selling expense) to convince the university to buy its books.
Depreciation expense for the year was $15100. In addition Stein Books borrowed $101000 on January 1 2013 on which the company paid 14 percent interest. Both the interest and principal of the loan were paid on December 31 2013. The publishing firms tax rate is 30 percent.
Prepare an income statement for Stein Books. (Input all amounts as positive values.)
Earnings after taxes $ 12992 .1%
award:
3 out of
3.00 points
Arrange the following items in proper balance sheet presentation: (Be sure to list the assets and
liabilities in order of their liquidity. Input all amounts as positive values.)
Accumulated depreciation $ 395000
Retained earnings 9000
Cash 15000
Bonds payable 215000
Accounts receivable 54000
Plant and equipmentoriginal cost 764000
Accounts payable 44000
Allowance for bad debts 7000
Common stock $1 par 100000 shares outstanding 100000
Inventory 70000
Preferred stock $52 par 1000 shares outstanding 52000
Marketable securities 24000
Investments 24000
Notes payable 35000
Capital paid in excess of par (common stock) 94000
Assets Balance Sheet
Liabilities and Stockholders Equity
Current Assets: Current Liabilities:
Cash $ 15000 Accounts payable $ 44000
Marketable securities 24000 Notes payable 35000
Accounts receivable $ 54000
Less: Allowance for bad debts 7000 Total current liabilities $ 79000
Long-term liabilities
Net accounts receivable 47000 Bonds payable 215000
Inventory 70000
Total current assets $ 156000 Total liabilities $ 294000
Other Assets: Stockholders Equity:
Investments 24000 Common stock $ 100000
Fixed assets: Preferred stock 52000
Plant and equipment $ 764000 Capital paid in excess of par 94000
Less: Accumulated depreciation 395000 Retained earnings 9000
Net plant and equipment 369000 Total stockholders equity $ 255000
Total assets $ 549000 Total liabilities and stockholders equity $ 549000
Arrange the following items in proper balance sheet presentation: (Be sure to list the assets and liabilities in order of their liquidity. Input all amounts as positive values.)
Accumulated depreciation $ 395000 Retained earnings 9000
Cash 15000
Bonds payable 215000
Accounts receivable 54000
Plant and equipmentoriginal cost 764000
Accounts payable 44000
Allowance for bad debts 7000
Common stock $1 par 100000 shares outstanding 100000 Inventory 70000
Preferred stock $52 par 1000 shares outstanding 52000 Marketable securities 24000
Investments 24000
Notes payable 35000
Capital paid in excess of par (common stock) 94000
Balance Sheet
Assets Liabilities and Stockholders Equity
Current Assets: Current Liabilities:
15000 Accounts payable $ 44000
Marketable securities 24000 Notes payable 35000
54000
Less: Allowance for bad debts 7000 Total current liabilities $ 79000 .1%
Long-term liabilities
Net accounts receivable 47000 .1% Bonds payable 215000
Inventory 70000
156000 .1% Total liabilities $ 294000 .1%
Other Assets: Stockholders Equity:
764000 Capital paid in excess of par 94000
Less: Accumulated depreciation 395000 Retained earnings 9000 Net plant and equipment 369000 .1% Total stockholders equity $ 255000 .1% Total assets $ 549000 .1% Total liabilities and stockholders equity $ 549000 .1%
award:
2 out of
2.00 points
Elite Trailer Parks has an operating profit of $300000. Interest expense for the year was $38100; preferred dividends paid were $29500; and common dividends paid were $36700. The tax was $69100. The firm has 16400 shares of common stock outstanding.
a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)
b. What was the increase in retained earnings for the year?
Elite Trailer Parks has an operating profit of $300000. Interest expense for the year was $38100; preferred dividends paid were $29500; and common dividends paid were $36700. The tax was $69100. The firm has 16400 shares of common stock outstanding.
a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.)
Earnings per share $ 9.96 1%
Common dividends per share $ 2.24 1%
b. What was the increase in retained earnings for the year?
126600 .1%
award:
1 out of
1.00 point
Quantum Technology had $664000 of retained earnings on December 31 2013. The company paid common dividends of $31300 in 2013 and had retained earnings of $588000 on December 31 2012.
a. How much did Quantum Technology earn during 2013?
b. What would earnings per share be if 44900 shares of common stock were outstanding? (Round your answer to 2 decimal places.)
Quantum Technology
Retained earnings December 31 2013 $ 664000
Less: Retained earnings December 31 2012 588000
Change in retained earnings $ 76000
Add: Common stock dividends 31300
Earnings available to common stockholders $ 107300
award:
2 out of
2.00 points
Botox Facial Care had earnings after taxes of $284000 in 2012 with 200000 shares of stock outstanding. The stock price was $45.80. In 2013 earnings after taxes increased to $350000 with the same 200000 shares outstanding. The stock price was $56.00.
a. Compute earnings per share and the P/E ratio for 2012. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
b. Compute earnings per share and the P/E ratio for 2013. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)
Botox Facial Care had earnings after taxes of $284000 in 2012 with 200000 shares of stock outstanding. The stock price was $45.80. In 2013 earnings after taxes increased to $350000 with the same 200000 shares outstanding. The stock price was $56.00.
a. Compute earnings per share and the P/E ratio for 2012. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
Earnings per share $ 1.42 1%
P/E ratio 32.25 1% times
b. Compute earnings per share and the P/E ratio for 2013. (Do not round intermediate calculations. Round your final answers to 2 decimal places.)
Earnings per share $ 1.75 1%
P/E ratio 32.00 1% times
c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.)
The stock price increased by 22.27 1% percent while EPS increased by 23.24 1% percent.
award:
2 out of
2.00 points
The Rogers Corporation has a gross profit of $784000 and $314000 in depreciation expense. The Evans Corporation also has $784000 in gross profit with $48900 in depreciation expense. Selling and administrative expense is $200000 for each company.
a. Given that the tax rate is 40 percent compute the cash flow for both companies.
b. Calculate the difference in cash flow between the two firms.
Rogers Corporation Evans Corporation
Rogers Evans
Gross profit $ 784000 $ 784000
Selling and adm. expense 200000 200000
Depreciation 314000 48900
Operating profit $ 270000 $ 535100
Taxes (40%) 108000 214040
Earnings after taxes $ 162000 $ 321060
Plus: Depreciation expense 314000 48900
Cash flow $ 476000 $ 369960
award:
1 out of
1.00 point
Nova Electrics anticipated cash flow from operating activities of $8 million in 2011. It will need to spend $5.5 million on capital investments in order to remain competitive within the industry. Common stock dividends are projected at $.60 million and preferred stock dividends at $.40 million.
a. What is the firms projected free cash flow for the year 2011? (Enter your answer in millions of dollars rounded to 2 decimal places.)
b. What does the concept of free cash flow represent?
Free cash flow represents the funds that are available for special financing activities such as a leveraged buyout.
Nova Electronics
Cash flow from operating activities $ 8.00 million
Less:
Capital expenditures 5.50
Common stock dividends .60
Preferred stock dividends .40
award:
2 out of
2.00 points
The Holtzman Corporation has assets of $414000 current liabilities of $72000 and long-term liabilities of
$134000. There is $32600 in preferred stock outstanding; 20000 shares of common stock have been issued.
a. Compute book value (net worth) per share. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
b. If there is $34400 in earnings available to common stockholders and Holtzmans stock has a P/E of 16 times earnings per share what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
The Holtzman Corporation has assets of $414000 current liabilities of $72000 and long-term liabilities of
$134000. There is $32600 in preferred stock outstanding; 20000 shares of common stock have been issued.
a. Compute book value (net worth) per share. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
8.77 1%
b. If there is $34400 in earnings available to common stockholders and Holtzmans stock has a P/E of 16 times earnings per share what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
27.52 1%
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Market value to book value 3.14 1% times
award:
3 out of
3.00 points
Amigo Software Inc. has total assets of $848000 current liabilities of $243000 and long-term liabilities of
$161000. There is $110000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued.
a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.)
b. If there is $55600 in earnings available to common stockholders and the firms stock has a P/E of 24 times earnings per share what is the current price of the stock? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)
Amigo Software Inc. has total assets of $848000 current liabilities of $243000 and long-term liabilities of
$161000. There is $110000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued.
a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.)
11.13 1%
b. If there is $55600 in earnings available to common stockholders and the firms stock has a P/E of 24 times earnings per share what is the current price of the stock? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)
44.48 1%
c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round you final answer to 2 decimal places.)
Market value to book value 4.00 1% times
award:
4 out of
4.00 points
For December 31 2012 the balance sheet of Baxter Corporation was as follows:
Current Assets Liabilities
Cash $ 18000 Accounts payable $ 20000
Accounts receivable 23000 Notes payable 28000
Inventory 33000 Bonds payable 58000
Prepaid expenses 12800
Fixed Assets Stockholders Equity
Gross plant and equipment $ 258000 Preferred stock $ 28000
Less: Accumulated depreciation 51600 Common stock 63000
Paid-in capital 33000
Net plant and equipment 206400 Retained earnings 63200
Total assets $ 293200 Total liabilities and stockholders equity $ 293200
Sales for 2013 were $260000 and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $26000. Depreciation expense was 11 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent while the interest rate on the bonds payable was 15 percent. This interest expense is based on December 31 2012 balances. The tax rate averaged 35 percent.
$2800 in preferred stock dividends were paid and $8750 in dividends were paid to common stockholders. There were 10000 shares of common stock outstanding.
During 2013 the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 9 percent. A new machine was purchased on December 31 2013 at a cost of
$43000.
Accounts payable increased by 25 percent. Notes payable increased by $6800 and bonds payable decreased by $14000 both at the end of the year. The preferred stock common stock and capital paid in excess of par accounts did not change.
a. Prepare an income statement for 2013. (Round EPS answer to 2 decimal places. Input all amounts as positive values.)
b. Prepare a statement of retained earnings for 2013. (Input all amounts as positive values.)
BAXTER CORPORATION
2013 Income Statement
Retained earnings balance January 1 2013 $ 63200
Add: Earnings available to common stockholders 2013 30610
Less: Cash dividend declared in 2013 8750
Retained earnings balance December 31 2013 $ 85060
c. Prepare a balance sheet as of December 31 2013. (Be sure to list the assets and liabilities in order of their liquidity. Input all amounts as positive values.)
Current Assets Liabilities
Cash $ 18000 Accounts payable $ 25000
Accounts receivable 25070 Notes payable 34800
44000
Prepaid expenses 12800
Total current assets $ 91840 Total liabilities $ 103800
For December 31 2012 the balance sheet of Baxter Corporation was as follows:
Current Assets Liabilities
Cash $ 18000 Accounts payable $ 20000
Accounts receivable 23000 Notes payable 28000
Inventory 33000 Bonds payable 58000
Prepaid expenses 12800
Fixed Assets Stockholders Equity
Gross plant and equipment $ 258000 Preferred stock $ 28000
Less: Accumulated depreciation 51600 Common stock 63000
Paid-in capital 33000
Net plant and equipment 206400 Retained earnings 63200
Total assets $ 293200 Total liabilities and stockholders equity $ 293200
Sales for 2013 were $260000 and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $26000. Depreciation expense was 11 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 9 percent while the interest rate on the bonds payable was 15 percent. This interest expense is based on December 31 2012 balances. The tax rate averaged 35 percent.
$2800 in preferred stock dividends were paid and $8750 in dividends were paid to common stockholders. There were 10000 shares of common stock outstanding.
During 2013 the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 9 percent. A new machine was purchased on December 31 2013 at a cost of
$43000.
Accounts payable increased by 25 percent. Notes payable increased by $6800 and bonds payable decreased by $14000 both at the end of the year. The preferred stock common stock and capital paid in excess of par accounts did not change.
a. Prepare an income statement for 2013. (Round EPS answer to 2 decimal places. Input all amounts as positive values.)
Sales $ 260000
Cost of goods sold 143000
Gross profit
$
117000 .1%
Selling and administrative expense 26000
Depreciation expense 28380
Operating profit $ 62620 .1%
Interest expense 11220
Earnings before taxes $ 51400 .1%
Taxes 17990
Earnings after taxes $ 33410 .1%
Preferred stock dividends 2800
Earnings available to common stockholders $ 30610 .1%
Shares outstanding
10000
Earnings per share $ 3.06 1%
b. Prepare a statement of retained earnings for 2013. (Input all amounts as positive values.)
BAXTER CORPORATION
2013 Income Statement
Retained earnings balance January 1 2013 $ 63200
Add: Earnings available to common stockholders 2013 30610 .1%
Less: Cash dividend declared in 2013 8750
Retained earnings balance December 31 2013 $ 85060 .1%
c. Prepare a balance sheet as of December 31 2013. (Be sure to list the assets and liabilities in order of their liquidity. Input all amounts as positive values.)
Current Assets Liabilities
Cash
Accounts receivable 25070 .1% Notes payable 34800 .1%
Inventory 35970 .1% Bonds payable 44000 .1%
Prepaid expenses 12800
Total current assets $ 91840 .1% Total liabilities $ 103800 .1%
Gross plant and equipment
$
301000 .1%
Preferred stock $ 28000
79980 .1% Common stock 63000
Capital paid in excess of par 33000
Net plant and equipment 221020 .1% Retained earnings 85060 .1%
209060 .1%
award:
2 out of
2.00 points
Refer to the following financial statements for Crosby Corporation:
CROSBY CORPORATION
Income Statement
For the Year Ended December 31 2011
Sales $3650000
Cost of goods sold 2330000
Gross profit $1320000
Selling and administrative expense 664000
Depreciation expense 291000
Interest expense 82900
Earnings before taxes $ 282100
Taxes 141000
Earnings after taxes $ 141100
Preferred stock dividends 10000
Earnings available to common stockholders $ 131100
Shares outstanding 150000
Earnings per share $ .87
Statement of Retained Earnings For the Year Ended December 31 2011
Retained earnings balance January 1 2011 $ 119900 Add: Earnings available to common stockholders 2011 131100 Deduct: Cash dividends declared and paid in 2011 197000
Retained earnings balance December 31 2011 $ 54000
Comparative Balance Sheets For 2010 and 2011
Year-End
2010 Year-End
2011
Assets
Current assets:
Cash $ 144000 $ 118500
Accounts receivable (net) 505000 524000
Inventory 624000 670000
Prepaid expenses 62700 32400
Total current assets $ 1335700 $ 1344900
Investments (long-term securities) 97500 87800
Gross plant and equipment $ 2320000 $ 2870000
Less: Accumulated depreciation 1920000 2211000
Net plant and equipment 400000 659000
Total assets $ 1833200 $ 2091700
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable $ 323000 $ 641000
Notes payable 534000 534000
Accrued expenses 77300 52700
Total current liabilities $ 934300 $ 1227700
Long-term liabilities:
Bonds payable 2011 189000 220000
Total liabilities $ 1123300 $ 1447700
Stockholders equity:
Preferred stock $100 par value $ 90000 $ 90000
Common stock $1 par value 150000 150000
Capital paid in excess of par 350000 350000
Retained earnings 119900 54000
Total stockholders equity $ 709900 $ 644000 Total liabilities and stockholders equity $ 1833200 $ 2091700
a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)
CROSBY CORPORATION
Statement of Cash Flows
For the Year Ended December 31 2011 Cash flows from operating activities:
Adjustments to determine cash flow from operating activities:
Increase in inventory -46000
Decrease in prepaid expenses 30300
Decrease in accrued expenses -24600
Cash flows from investing activities:
Decrease in investments $ 9700
Increase in plant and equipment -550000
Net cash flows from investing activities -540300
Cash flows from financing activities:
Increase in bonds payable $ 31000
Preferred stock dividends paid -10000
Common stock dividends paid -197000
Net cash flows from financing activities -176000
Net increase (decrease) in cash flows $ -25500
b. Compute the book value per common share for both 2010 and 2011 for the Crosby Corporation. (Round your answers to 2 decimals places.)
Book value 2010 $ 4.13
2011 $ 3.69
c. If the market value of a share of common stock is 2.7 times book value for 2011 what is the firms P/E ratio for 2011? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Refer to the following financial statements for Crosby Corporation:
CROSBY CORPORATION
Income Statement
For the Year Ended December 31 2011
Sales $3650000
Cost of goods sold 2330000
Gross profit $1320000
Selling and administrative expense 664000
Depreciation expense 291000
Operating income $ 365000
Interest expense 82900
Earnings before taxes $ 282100
Taxes 141000
Earnings after taxes $ 141100
Preferred stock dividends 10000
Earnings available to common stockholders $ 131100
Shares outstanding 150000
Earnings per share $ .87
Statement of Retained Earnings For the Year Ended December 31 2011
Retained earnings balance January 1 2011 $ 119900 Add: Earnings available to common stockholders 2011 131100 Deduct: Cash dividends declared and paid in 2011 197000
Retained earnings balance December 31 2011 $ 54000
Comparative Balance Sheets For 2010 and 2011
Year-End Year-End
2010 2011
Assets
Current assets:
Cash $ 144000 $ 118500
Accounts receivable (net) 505000 524000
Inventory 624000 670000
Prepaid expenses 62700 32400
Total current assets $ 1335700 $ 1344900
Investments (long-term securities) 97500 87800
Gross plant and equipment $ 2320000 $ 2870000
Less: Accumulated depreciation 1920000 2211000
Net plant and equipment 400000 659000
Total assets $ 1833200 $ 2091700
Liabilities and Stockholders Equity
Current liabilities:
Accounts payable $ 323000 $ 641000
Notes payable 534000 534000
Accrued expenses 77300 52700
Total current liabilities $ 934300 $ 1227700
Long-term liabilities:
Bonds payable 2011 189000 220000
Total liabilities $ 1123300 $ 1447700
Stockholders equity:
Preferred stock $100 par value $ 90000 $ 90000
Common stock $1 par value 150000 150000
Capital paid in excess of par 350000 350000
Retained earnings 119900 54000
Total stockholders equity $ 709900 $ 644000 Total liabilities and stockholders equity $ 1833200 $ 2091700
a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with a minus sign.)
CROSBY CORPORATION
Statement of Cash Flows
For the Year Ended December 31 2011 Cash flows from operating activities:
Adjustments to determine cash flow from operating activities:
Cash flows from investing activities:
Cash flows from financing activities:
Preferred stock dividends paid
Common stock dividends paid
Net cash flows from financing activities
Net increase (decrease) in cash flows $ -25500 .1%
b. Compute the book value per common share for both 2010 and 2011 for the Crosby Corporation. (Round your answers to 2 decimals places.)
2010 $ 4.13 1%
2011 $ 3.69 1%
c. If the market value of a share of common stock is 2.7 times book value for 2011 what is the firms P/E ratio for 2011? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
P/E ratio 11.41 1% times
award:
1 out of
1.00 point
Gates Appliances has a return-on-assets (investment) ratio of 17 percent.
a. If the debt-to-total-assets ratio is 60 percent what is the return on equity? (Input your answer as a percent rounded to 2 decimal places.)
b. If the firm had no debt what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.)
award:
2 out of
2.00 points
Using the Du Pont method evaluate the effects of the following relationships for the Butters Corporation.
a. Butters Corporation has a profit margin of 9 percent and its return on assets (investment) is 20 percent. What is its assets turnover? (Round your answer to 2 decimal places.)
b. If the Butters Corporation has a debt-to-total-assets ratio of 45.00 percent what would the firms return on equity be? (Input your answer as a percent rounded to 2 decimal places.)
c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 40.00 percent?
(Input your answer as a percent rounded to 2 decimal places.)
award:
2 out of
2.00 points
Jerry Rice and Grain Stores has $4030000 in yearly sales. The firm earns 2.5 percent on each dollar of sales and turns over its assets 2 times per year. It has $165000 in current liabilities and $323000 in long- term liabilities.
a. What is its return on stockholders equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
b. If the asset base remains the same as computed in part a but total asset turnover goes up to 2.50 what will be the new return on stockholders equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Jerry Rice and Grain Stores has $4030000 in yearly sales. The firm earns 2.5 percent on each dollar of sales and turns over its assets 2 times per year. It has $165000 in current liabilities and $323000 in long- term liabilities.
a. What is its return on stockholders equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Return on stockholders’ equity 6.60 1% %
b. If the asset base remains the same as computed in part a but total asset turnover goes up to 2.50 what will be the new return on stockholders equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
New return on stockholders’ equity 8.25 1% %
award:
2 out of
2.00 points
Assume the following data for Cable Corporation and Multi-Media Inc.
Cable Multi-Media Inc.
Net income $ 39800 $ 190000
Sales 352000 2170000
Total assets 409000 966000
Total debt 234000 545000
Stockholders’ equity 175000 421000
a-1. Compute return on stockholders equity for both firms. (Input your answers as a percent rounded to 2 decimal places.)
Return on Stockholders Equity
Cable Corporation 22.74 %
Multi-Media Inc. 45.13 %
a-2.
Which firm has the higher return?
Multi-Media Inc.
b. Compute the following additional ratios for both firms. (Input your Net income/Sales Net
income/Total assets and Debt/Total asset answers as a percent rounded to 2 decimal places. Round your Sales/Total assets answers to 2 decimal places.)
Cable Corporation Multi-Media Inc.
Net income/Sales 11.31 % 8.76 %
Net income/Total assets 9.73 % 19.67 %
Sales/Total assets .86 times 2.25 times
Debt/Total assets 57.21 % 56.42 %
Assume the following data for Cable Corporation and Multi-Media Inc.
Cable
Corporation Multi-Media Inc.
Net income $ 39800 $ 190000
Sales 352000 2170000
Total assets 409000 966000
Total debt 234000 545000
Stockholders’ equity 175000 421000
a-1. Compute return on stockholders equity for both firms. (Input your answers as a percent rounded to 2 decimal places.)
Return on Stockholders Equity
Cable Corporation 22.74 1% %
Multi-Media Inc. 45.13 1% %
a-2. Which firm has the higher return?
Multi-Media Inc.
b. Compute the following additional ratios for both firms. (Input your Net income/Sales Net income/Total assets and Debt/Total asset answers as a percent rounded to 2 decimal places. Round your Sales/Total assets answers to 2 decimal places.)
Cable Corporation Multi-Media Inc.
Net income/Sales 11.31 1% % 8.76 1% %
Net income/Total assets 9.73 1% % 19.67 1% %
Sales/Total assets .86 1% times 2.25 1% times
Debt/Total assets 57.21 1% % 56.42 1% %
award:
2 out of
points
The balance sheet for Stud Clothiers is shown next. Sales for the year were $3190000 with 75 percent of sales sold on credit.
STUD CLOTHIERS
Balance Sheet 20XX
Assets Liabilities and Equity
Cash $ 24000 Accounts payable $ 279000
Accounts receivable 283000 Accrued taxes 107000
Inventory 266000 Bonds payable (long-term) 130000
Plant and equipment 450000 Common stock 100000
Paid-in capital 150000
Retained earnings 257000
Total assets $1023000 Total liabilities and equity $ 1023000
Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.)
a. Current ratio 1.48 times
b. Quick ratio .80 times
c. Debt-to-total-assets ratio 50.44 %
d. Asset turnover 3.12 times
e. Average collection period 42.58 days
The balance sheet for Stud Clothiers is shown next. Sales for the year were $3190000 with 75 percent of sales sold on credit.
STUD CLOTHIERS
Balance Sheet 20XX
Assets Liabilities and Equity
Cash $ 24000 Accounts payable $ 279000
Accounts receivable 283000 Accrued taxes 107000
Inventory 266000 Bonds payable (long-term) 130000
Plant and equipment 450000 Common stock 100000
Paid-in capital 150000
Retained earnings 257000
Total assets $1023000 Total liabilities and equity $ 1023000
Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.)
a. Current ratio 1.48 1% times
b. Quick ratio .80 1% times
c. Debt-to-total-assets ratio 50.44 1% %
d. Asset turnover 3.12 1% times
e. Average collection period 42.58 1% days
award:
2 out of
2.00 points
Using the income statement for Times Mirror and Glass Co. compute the following ratios:
TIMES MIRROR AND GLASS Co.
Income Statement
Sales $ 223000
Cost of goods sold 130000
Gross profit $ 93000
Selling and administrative expense 44000
Lease expense 19100
Operating profit* $ 29900
Interest expense 10600
Earnings before taxes $ 19300
Taxes (30%) 7720
Earnings after taxes $ 11580
*Equals income before interest and taxes.
a. Compute the interest coverage ratio. (Round your answer to 2 decimal places.)
b. Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.)
The total assets for this company equal $174000. Set up the equation for the Du Pont system of ratio analysis.
c. Compute the profit margin ratio. (Input your answer as a percent rounded to 2 decimal places.)
d. Compute the total asset turnover ratio. (Round your answer to 2 decimal places.)
e. Compute the return on assets (investment). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Using the income statement for Times Mirror and Glass Co. compute the following ratios:
TIMES MIRROR AND GLASS Co.
Income Statement
Sales $ 223000
Cost of goods sold 130000
Gross profit $ 93000
Selling and administrative expense 44000
Lease expense 19100
Operating profit* $ 29900
Interest expense 10600
Earnings before taxes $ 19300
Taxes (30%) 7720
Earnings after taxes $ 11580
*Equals income before interest and taxes.
a. Compute the interest coverage ratio. (Round your answer to 2 decimal places.)
Interest coverage 2.82 1% times
b. Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.)
Fixed charge coverage 1.65 1% times
The total assets for this company equal $174000. Set up the equation for the Du Pont system of ratio analysis.
c. Compute the profit margin ratio. (Input your answer as a percent rounded to 2 decimal places.)
Profit margin 5.19 1% %
d. Compute the total asset turnover ratio. (Round your answer to 2 decimal places.)
Total asset turnover 1.28 1% times
e. Compute the return on assets (investment). (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Return on assets 6.66 1% %
award:
1 out of
1.00 point
A firm has net income before interest and taxes of $179000 and interest expense of $29500.
a. What is the times-interest-earned ratio? (Round your answer to 2 decimal places.)
b. If the firms lease payments are $44000 what is the fixed charge coverage? (Round your answer to 2 decimal places.)
award:
2 out of
2.00 points
Quantum Moving Company has the following data. Industry information also is shown.
2011 $ 388000 $ 2868000 12.8 %
2012 412000 3244000 8.2
2013 408000 3762000 4.4
Year
Debt
Total Assets Industry Data on Debt/Total Assets
2011 $ 1692000 $ 2868000 55.4 %
2012 1740000 3244000 49.0
2013 1981000 3762000 30.0
a. Calculate the company’s data in terms of: (Input your answers as a percent rounded to 1 decimal place.)
2011 2012 2013
Net income/Total assets 13.5 % 12.7 % 10.8 %
Debt/Total assets 59.0 % 53.6 % 52.7 %
b. As an industry analyst comparing the firm to the industry are you likely to praise or criticize the firm in terms of:
Praise/Criticize
Quantum Moving Company has the following data. Industry information also is shown.
2011 $ 388000 $ 2868000 12.8 %
2012 412000 3244000 8.2
2013 408000 3762000 4.4
Year
Debt
Total Assets Industry Data on Debt/Total Assets
2011 $ 1692000 $ 2868000 55.4 %
2012 1740000 3244000 49.0
2013 1981000 3762000 30.0
a. Calculate the company’s data in terms of: (Input your answers as a percent rounded to 1 decimal place.)
2011 2012 2013
Net income/Total assets 13.5 1% % 12.7 1% % 10.8 1% %
Debt/Total assets 59.0 1% % 53.6 1% % 52.7 1% %
b. As an industry analyst comparing the firm to the industry are you likely to praise or criticize the firm in terms of:
Praise/Criticize Net income/Total assets Praise
Debt/Total assets Criticize
award:
1.34 out of
2.00 points
The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting.
CANTON CORPORATION
Income Statement for 2013
Sales $ 152100 (11700 units at $13.00) Cost of goods sold 93600 (11700 units at $8.00)
Gross profit $ 58500
Selling and administrative expense 9126
Depreciation 19400
Operating profit $ 29974
Taxes (30%) 8992
Aftertax income $ 20982
a. Assume in 2014 the same 11700-unit volume is maintained but that the sales price increases by 10 percent. Because of FIFO inventory policy old inventory will still be charged off at $8.00 per unit. Also assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 2014. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
b. In part a by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
c. Now assume that in 2015 the volume remains constant at 11700 units but the sales price decreases by 15 percent from its year 2014 level. Also because of FIFO inventory policy cost of goods sold reflects the inflationary conditions of the prior year and is $8.50 per unit. Further assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax income. (Round the sales price per unit to 2 decimal places but do not round any other intermediate calculations. Round your final answer to the nearest whole dollar amount.)
The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting.
CANTON CORPORATION
Income Statement for 2013
Sales $ 152100 (11700 units at $13.00)
Cost of goods sold 93600 (11700 units at $8.00)
Gross profit $ 58500
Selling and administrative expense 9126
Depreciation 19400
Operating profit $ 29974
Taxes (30%) 8992
Aftertax income $ 20982
a. Assume in 2014 the same 11700-unit volume is maintained but that the sales price increases by 10 percent. Because of FIFO inventory policy old inventory will still be charged off at $8.00 per unit. Also assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 2014. (Do not round intermediate calculations. Round your answer to the nearest whole number.)
Aftertax income $ 30990 .1%
b. In part a by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Gain in aftertax income 47.70 1% %
c. Now assume that in 2015 the volume remains constant at 11700 units but the sales price decreases by 15 percent from its year 2014 level. Also because of FIFO inventory policy cost of goods sold reflects the inflationary conditions of the prior year and is $8.50 per unit. Further assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax income. (Round the sales price per unit to 2 decimal places but do not round any other intermediate calculations. Round your final answer to the nearest whole dollar amount.)
Aftertax income $ 10420 0.1%
award:
3 out of
3.00 points
The Griggs