Financial Ratios for Common Stockholders
SuperClassEXERCISE 15–2 Financial Ratios for Common Stockholders [LO2]
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or pre- ferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 14%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company’s common stock at the end of the year was $26. All of the company’s sales are on account.
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $ 1,080 |
| $ 1,210 |
Accounts receivable, net . . . . . . . . . . . . . . . | 9,000 |
| 6,500 |
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . | 12,000 |
| 10,600 |
Prepaid expenses . . . . . . . . . . . . . . . . . . . . | 600 |
| 500 |
Total current assets . . . . . . . . . . . . . . . . . . . . | 22,680 |
| 18,810 |
Property and equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . |
9,000 |
|
9,000 |
Buildings and equipment, net . . . . . . . . . . . | 36,800 |
| 38,000 |
Total property and equipment . . . . . . . . . . . . . | 45,800 |
| 47,000 |
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . | $68,480 |
| $65,810 |
Liabilities and Stockholders’ Equity Current liabilities: Accounts payable . . . . . . . . . . . . . . . . . . . . |
$18,500 |
|
$17,400 |
Accrued payables . . . . . . . . . . . . . . . . . . . . | 900 |
| 700 |
Notes payable, short term . . . . . . . . . . . . . . | — |
| 100 |
Total current liabilities . . . . . . . . . . . . . . . . . . . Long-term liabilities: Bonds payable . . . . . . . . . . . . . . . . . . . . . . | 19,400
8,000 |
| 18,200
8,000 |
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . | 27,400 |
| 26,200 |
Stockholders’ equity: Preferred stock . . . . . . . . . . . . . . . . . . . . . . |
1,000 |
|
1,000 |
Common stock . . . . . . . . . . . . . . . . . . . . . . | 2,000 |
| 2,000 |
Additional paid-in capital . . . . . . . . . . . . . . . | 4,000 |
| 4,000 |
Total paid-in capital . . . . . . . . . . . . . . . . . | 7,000 |
| 7,000 |
Retained earnings . . . . . . . . . . . . . . . . . . | 34,080 |
| 32,610 |
Total stockholders’ equity . . . . . . . . . . . . . . . . | 41,080 |
| 39,610 |
Total liabilities and stockholders’ equity . . . . . | $68,480 |
| $65,810 |
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . | $66,000 |
| $64,000 |
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . | 43,000 |
| 42,000 |
Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . | 23,000 |
| 22,000 |
Selling and administrative expenses: Selling expenses . . . . . . . . . . . . . . . . . . . . |
11,500 |
|
11,000 |
Administrative expenses . . . . . . . . . . . . . . . | 7,400 |
| 7,000 |
Total selling and administrative expenses . . . . | 18,900 |
| 18,000 |
Net operating income . . . . . . . . . . . . . . . . . . . | 4,100 |
| 4,000 |
Interest expense . . . . . . . . . . . . . . . . . . . . . . . | 800 |
| 800 |
Net income before taxes . . . . . . . . . . . . . . . . . | 3,300 |
| 3,200 |
Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . | 1,320 |
| 1,280 |
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . | 1,980 |
| 1,920 |
Dividends to preferred stockholders . . . . . . . . | 60 |
| 400 |
Net income remaining for common stockholders . . . . . . . . . . . . . . . . . |
1,920 |
|
1,520 |
Dividends to common stockholders . . . . . . . . | 450 |
| 450 |
Net income added to retained earnings . . . . . | 1,470 |
| 1,070 |
Retained earnings, beginning of year . . . . . . . | 32,610 |
| 31,540 |
Retained earnings, end of year . . . . . . . . . . . | $34,080 |
| $32,610 |
Required:
Compute the following financial ratios for common stockholders for this year:
1. Gross margin percentage.
2. Earnings per share of common stock.
3. Price-earnings ratio.
4. Dividend payout ratio.
5. Dividend yield ratio.
6. Return on total assets.
7. Return on common stockholders’ equity.
8. Book value per share.
10 years ago
Purchase the answer to view it
financial_ratios_for_common_stockholders.docx
