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13–625
271.
Sidell Corporation’s most recent balance sheet and income statement appear below:
Balance Sheet
December 31, Year 2 and Year 1
(in thousands of dollars)
Assets
Year 2
Year 1
Current assets:
Cash
$180
$100
Accounts receivable
220
200
Inventory
180
200
Prepaid expenses
20
20
Total current assets
600
520
Plant and equipment, net
660
720
Total assets
$1,260
$1,240
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$130
$130
Accrued liabilities
20
20
Notes payable, short term
100
90
Total current liabilities
250
240
Bonds payable
180
200
Total liabilities
430
440
Stockholders’ equity:
Common stock, $1 par value
200
200
Additional paid-in capital—common stock
300
300
Retained earnings
330
300
Total stockholders’ equity
830
800
Total liabilities & stockholders’ equity
$1,260
$1,240
13–626
Income Statement
For the Year Ended December 31,
Year 2
(in thousands of dollars)
Sales (all on account)
$1,230
Cost of goods sold
780
Gross margin
450
Selling and administrative
expense
235
Net operating income
215
Interest expense
29
Net income before taxes
186
Income taxes (30%)
56
Net income
$130
Required:
Compute the following for Year 2:
a. Times interest earned.
b. Debt-to-equity ratio.
13–627
13–628
272.
Lindboe Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets
Year 2
Year 1
Current assets:
Cash
$190,000
$190,000
Accounts receivable
225,000
210,000
Inventory
172,000
190,000
Prepaid expenses
83,000
70,000
Total current assets
670,000
660,000
Plant and equipment, net
877,000
870,000
Total assets
$1,547,000
$1,530,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$176,000
$180,000
Accrued liabilities
25,000
30,000
Notes payable, short term
36,000
40,000
Total current liabilities
237,000
250,000
Bonds payable
160,000
160,000
Total liabilities
397,000
410,000
Stockholders’ equity:
Common stock, $2 par value
160,000
160,000
Additional paid-in capital—common stock
100,000
100,000
Retained earnings
890,000
860,000
Total stockholders’ equity
1,150,000
1,120,000
Total liabilities & stockholders’ equity
$1,547,000
$1,530,000
13–629
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)
$1,220,000
Cost of goods sold
700,000
Gross margin
520,000
Operating expenses
458,286
Net operating income
61,714
Interest expense
12,000
Net income before taxes
49,714
Income taxes (30%)
14,914
Net income
$34,800
Dividends on common stock during Year 2 totaled $4,800. The market price of common
stock at the end of Year 2 was $5.46 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt-to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
13–630
13–631
273.
Schepp Corporation has provided the following financial data:
Year 2
Year 1
Total assets
$1,320,000
$1,290,000
Total
liabilities
$468,000
$450,000
Total
stockholders’
equity
$852,000
$840,000
Income Statement
For the Year Ended December 31, Year 2
Sales (all on account)
$1,440,000
Cost of goods sold
880,000
Gross margin
560,000
Operating expenses
527,857
Net operating income
32,143
Interest expense
10,000
Net income before taxes
22,143
Income taxes (30%)
6,643
Net income
$15,500
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt-to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
13–634
274.
Brill Corporation has provided the following financial data:
Year 2
Year 1
Total assets
$1,360,000
$1,320,000
Total
liabilities
$601,000
$570,000
Common
stock, $2 par
value
$140,000
$140,000
Total common
stockholders’
equity
$759,000
$750,000
Income Statement
For the Year Ended December 31,
Year 2
Sales (all on account)
$1,300,000
Cost of goods sold
900,000
Gross margin
400,000
Operating expenses
364,143
Net operating income
35,857
Interest expense
20,000
Net income before
taxes
15,857
Income taxes (30%)
4,757
Net income
$11,100
Dividends on common stock during Year 2 totaled $2,100. The market price of common
stock at the end of Year 2 was $2.32 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt-to-equity ratio at the end of Year 2?
13–635
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?
13–637
13–638
275.
Jaquez Corporation has provided the following financial data:
Year 2
Year 1
Total assets
$1,466,000
$1,460,000
Total liabilities
$573,000
$590,000
Stockholders’ equity:
Common stock, $3 par value
$300,000
$300,000
Additional paid-in capital—common stock
60,000
60,000
Retained earnings
533,000
510,000
Total stockholders’ equity
$893,000
$870,000
Income Statement
For the Year Ended December 31,
Year 2
Sales (all on account)
$1,450,000
Cost of goods sold
850,000
Gross margin
600,000
Operating expenses
530,231
Net operating income
69,769
Interest expense
19,000
Net income before
taxes
50,769
Income taxes (35%)
17,769
Net income
$33,000
Dividends on common stock during Year 2 totaled $10,000. The market price of common
stock at the end of Year 2 was $5.45 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt-to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
13–639
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?
13–642
276.
Medina Corporation has provided the following financial data:
Balance Sheet
December 31, Year 2 and Year 1
Assets
Year 2
Year 1
Current assets:
Cash
$271,000
$190,000
Accounts receivable
215,000
190,000
Inventory
117,000
100,000
Prepaid expenses
25,000
30,000
Total current assets
628,000
510,000
Plant and equipment, net
726,000
800,000
Total assets
$1,354,000
$1,310,000
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable
$198,000
$170,000
Accrued liabilities
58,000
60,000
Notes payable, short term
102,000
90,000
Total current liabilities
358,000
320,000
Bonds payable
140,000
140,000
Total liabilities
498,000
460,000
Stockholders’ equity:
Common stock, $5 par value
500,000
500,000
Additional paid-in capital—common stock
80,000
80,000
Retained earnings
276,000
270,000
Total stockholders’ equity
856,000
850,000
Total liabilities & stockholders’ equity
$1,354,000
$1,310,000
Income Statement
For the Year Ended December 31,
Year 2
Sales (all on account)
$1,280,000
Cost of goods sold
840,000
13–643
Gross margin
440,000
Operating expenses
413,692
Net operating income
26,308
Interest expense
14,000
Net income before
taxes
12,308
Income taxes (35%)
4,308
Net income
$8,000
Dividends on common stock during Year 2 totaled $2,000. The market price of common
stock at the end of Year 2 was $1.49 per share.
Required:
a. What is the company’s times interest earned for Year 2?
b. What is the company’s debt-to-equity ratio at the end of Year 2?
c. What is the company’s equity multiplier at the end of Year 2?
d. What is the company’s net profit margin percentage for Year 2?
e. What is the company’s gross margin percentage for Year 2?
f. What is the company’s return on total assets for Year 2?
g. What is the company’s return on equity for Year 2?
h. What is the company’s earnings per share for Year 2?
i. What is the company’s price-earnings ratio for Year 2?
j. What is the company’s dividend payout ratio for Year 2?
k. What is the company’s dividend yield ratio for Year 2?
l. What is the company’s book value per share at the end of Year 2?
