Ten Financial ratios
Account_tutor
Condensed data taken from the balance sheet at the end of the current year are as follows:
Assets
Cash ............................................................................................................................................................................ $ 300,000
Marketable securities ............................................................................................................................................... 125,000
Accounts receivable ................................................................................................................................................. 275,000
Merchandise inventory ............................................................................................................................................. 1,200,000
Prepaid expenses ..................................................................................................................................................... 76,000
Fixed assets (net) ...................................................................................................................................................... 2,000,000
Liabilities and Stockholders� Equity
Accounts payable ...................................................................................................................................................... $ 400,000
Notes payable (short-term, non-interest-bearing) .............................................................................................. 250,000
Accrued liabilities ...................................................................................................................................................... 100,000
Bonds payable, 10%, due 2023 ............................................................................................................................. 2,000,000
Preferred 9% stock, $50 par ................................................................................................................................... 500,000
Common stock, $20 par .......................................................................................................................................... 300,000
Paid-in capital in excess of par�common stock ................................................................................................ 100,000
Retained earnings ..................................................................................................................................................... 326,000
Selected data related to the 12 months of the current year indicate the following:
Average accounts receivable ................................................................................................................................. $ 300,000
Average common stockholders� equity ............................................................................................................... 700,000
Average stockholders� equity .................................................................................................................................. 1,200,000
Average total assets ................................................................................................................................................. 3,400,000
Cash dividends paid on common stock ............................................................................................................... 1111,000
Income before income tax ...................................................................................................................................... 300,000
Interest expense ........................................................................................................................................................ 50,000
Net income ................................................................................................................................................................. 250,000
Net sales (on account) ............................................................................................................................................. 2,000,000
..... The common stock was selling for $75 per share at the end of the current year.
INSTRUCTIONS: Compute the analytical measures listed below, rounding to one decimal point, and insert answers in the Answers column.
For | ||
Answers | Scoring | |
0. Ratio of fixed assets to long-term liabilities ............................................... | 2.8 | 0. ____ |
1. Quick ratio ................................................................................................... | 1. ____ | |
2. Current ratio ..................................................................................................... | 2. ____ | |
3. Working capital ............................................................................................... | $ |
|
4. Accounts receivable turnover ....................................................................... | 4. ____ | |
5. Rate earned on total assets ........................................................................... | 5. ____ | |
6. Rate earned on common stockholders’ equity .......................................... | 6. ____ | |
7. Number of times interest charges earned ................................................. | 7. ____ | |
8. Earnings per share on common stock ........................................................ | $ | 8. ____ |
9. Price-earnings ratio on common stock........................................................ | 9. ____ | |
10. Dividend yield on common stock ................................................................. | 10. ____ |
10 years ago
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