ABC Co

ABC Co.
Comparative Balance Sheet
December 31, 2014
ASSETS
Cash
Marketable Securities
Accounts Receivable (net)
Inventory
Property, Plant and Equipment (net)
Total assets

2014
$25,000
20,000
40,000
150,000
170,000
$405,000

2013
$40,000
60,000
30,000
170,000
200,000
$500,000

Liabilities and Stockholders’ equity
Accounts Payable
Short Term Notes Payable
Bonds Payable
Common Stock
Retained Earnings
Total Liabilities and Stockholders’
Equity

$25,000
40,000
75,000
175,000
90,000
$405,000

$30,000
90,000
160,000
145,000
75,000
$500,000

ABC Co.
Income Statement
For the Year Ended December 31, 2014

Net Sales
Cost of Goods Sold
Gross Profit
Expenses
Interest Expense
Selling Expense
Administrative Expense
Total Expenses
Income before income taxes
Income tax expense
Net income

$360,000
184,000
176,000
21,000
30,000
20,000
71,000
105,000
30,000
$75,000

Additional information:
a. Cash dividends of $50,000 were declared and paid in 2014.
b. Weighted average number of shares of common stock outstanding during 2014 was
62,000 shares
c. Market value of common stock on December 31, 2014 was $15 per share.
d. Net cash provided by operating activities for 2014 was $65,000

Instructions:
Using the financial statements and additional information, compute the following ratios for ABC
Co. for 2014. Show all computations.
1.

Current ratio

2. Return on common stockholders equity
3. Price earnings ratio
4. Inventory turnover ratio
5. Receivables turnover
6. Times interest earned
7. Profit margin ratio
8. Average days in inventory
9. Payout ratio
10. Return on assets