102
204) A company’s calendar-year financial data are shown below. The company had total assets
of $339,000 and total equity of $144,400 for the prior year. No additional shares of common
stock were issued during the year. The December 31 market price per share is $49.50. Cash
dividends of $19,500 were paid during the year. Calculate the following ratios for the company:
(a) profit margin ratio
(b) gross margin ratio
(c) return on total assets
(d) return on common stockholders’ equity
(e) book value per common share
(f) basic earnings per share
(g) price earnings ratio
(h) dividend yield.
Net sales
$650,000
Cost of goods sold
422,500
Gross profit
$227,500
Operating expenses
140,500
Operating income
$ 87,000
Interest expense
9,100
Income before taxes
$ 77,900
Income taxes
23,400
Net income
$ 54,500
Ending
Balances
Cash
$ 19,500
Accounts receivable (net)
65,000
Inventory
71,500
Plant assets (net)
195,000
Total assets
$351,000
Current liabilities
$ 74,100
Long-term notes payable
97,500
Common stock, $5 par value
65,000
Retained earnings
114,400
Total liabilities and equity
$351,000
104
205) A company’s calendar-year financial data are shown below. The company had total assets
of $339,000 and total equity of $144,400 for the prior year. No additional shares of common
stock were issued during the year. The December 31 market price per share is $49.50. Cash
dividends of $19,500 were paid during the year. Calculate the following ratios for the company:
(a) debt ratio
(b) equity ratio
(c) debt-to-equity ratio
(d) times interest earned
(e) total asset turnover
Net sales
$650,000
Cost of goods sold
422,500
Gross profit
$227,500
Operating expenses
140,500
Operating income
$ 87,000
Interest expense
9,100
Income before taxes
$ 77,900
Income taxes
23,400
Net income
$ 54,500
Ending
Balances
Cash
$ 19,500
Accounts receivable (net)
65,000
Inventory
71,500
Plant assets (net)
195,000
Total assets
$351,000
Current liabilities
$ 74,100
Long-term notes payable
97,500
Common stock, $5 par value
65,000
Retained earnings
114,400
Total liabilities and equity
$351,000
105
(a) ($74,100 + $97,500)/$351,000 =
(b) ($65,000 + $114,400)/$351,000 =
(c) ($74,100 + $97,500)/$179,400 =
.96
(d) $87,000/$9,100 =
9.6
(e) $650,000/[($351,000 + $339,000)/2] =
1.9
206) Comparative calendar-year financial data for a company are shown below. Calculate the
following ratios for the company for Year 2:
(a) accounts receivable turnover
(b) day’s sales uncollected
(c) inventory turnover
(d) days’ sales in inventory
Year 1
Sales
$607,500
Cost of goods sold
382,700
Operating expenses
134,900
Net income
51,700
December 31,
Year 1
Accounts receivable (net)
$162,500
Inventory
110,500
Total assets
944,800
106
(a) $720,000/[($157,500 + $162,500)/2] =
4.5 times
(b) ($157,500/$720,000) * 365 =
79.8 days
(c) $450,000/[($139,500 + $110,500)/2] =
3.6 times
(d) ($139,500/$450,000) * 365
113.2 days
207) Comparative calendar year financial data for a company are shown below. Calculate the
following ratios for Year 2:
(a) return on total assets
(b) return on common stockholders’ equity.
Year 1
Sales
$ 607,500
Gross profit
224,800
Income before taxes
78,700
Net income
51,700
December 31,
Year 1
Liabilities
$ 452,500
Common stock ($12 par)
180,000
Contributed capital in excess of
par
135,000
Retained earnings
177,300
Total liabilities and equity
$ 944,800
108
208) The current year-end balance sheet data for a company are shown below. Calculate the
company’s:
(a) working capital
(b) current ratio
(c) acid-test ratio.
Assets:
Cash $ 38,000
Marketable securities 45,000
Accounts receivable (net) 127,500
Merchandise inventory 149,500
Long-term investments 135,000
Plant assets (net) 517,500
Total assets $ 1,012,500
Liabilities and equity:
Accounts payable $ 148,700
Accrued liabilities 90,000
Notes payable (secured by plant assets) 254,800
Common stock ($12 par) 180,000
Contributed capital in excess of par 135,000
Retained earnings 204,000
Total liabilities and equity $1,012,500
209) The comparative income statements for Silverlight Company are shown below. Calculate
the following ratios for Year 2:
(a) profit margin
(b) gross margin
(c) times interest earned.
Silverlight Company
Income Statements
For Years Ended December 31,
Year 2
Year 1
Net sales
$720,000
$607,500
Cost of goods sold
450,000
382,700
Gross profit
$270,000
$224,800
Operating expense
168,500
134,900
Income from operations
$101,500
$ 89,900
Interest expense
22,300
11,200
Income before taxes
$ 79,200
$ 78,700
Income taxes
28,000
27,000
Net income
$ 51,200
$ 51,700
(a) $51,200/$720,000 =
7.1%
(b) $270,000/$720,000 =
37.5%
(c) $101,500/$22,300 =
4.55 times
210) A corporation reports the following year-end balance sheet data. Calculate the following
ratios:
(a) working capital
(b) acid-test ratio
(c) current ratio
(d) debt ratio
(e) equity ratio
(f) debt-to-equity ratio
Cash $ 50,000 Current liabilities $ 64,000
Accounts receivable 35,000 Long-term liabilities 72,000
Inventory 60,000 Common stock 100,000
Equipment 140,000 Retained earnings 49,000
Total assets $285,000 Total liabilities and equity $285,000
211) Selected balances from a company’s financial statements are shown below. Calculate the
following ratios for Year 2:
(a) accounts receivable turnover
(b) inventory turnover
(c) days’ sales uncollected
(d) days’ sales in inventory
(d) profit margin.
(e) return on total assets.
Dec. 31,
Dec. 31,
For
Year 2
Year 1
Year 2
Accounts receivable
$ 27,000
$ 24,000
Merchandise inventory
25,000
20,000
Total assets
296,000
244,000
Accounts payable
26,000
32,000
Salaries payable
3,000
4,400
Sales (all on credit)
$312,000
Cost of goods sold
165,600
Salaries expense
48,000
Other expenses
75,000
Net income
24,000
$24,000/)2)
12.2 times
(b) Inventory turnover = $165,600/(($25,000 + $20,000)/2) =
7.4 times
(c) Days’ sales uncollected = ($27,000/$312,000) * 365 =
31.6 days
(d) Days’ sales in inventory = ($25,000/$165,600) * 365
55.1 days
(d) Profit margin = ($24,000/$312,000) * 100 =
7.7%
(d) Return on total assets = $24,000/[($296,000 + $244,000)/2] =
8.9%
212) The following selected financial information for a company was reported for the current
year end. Calculate the following company ratios:
(a) Accounts receivable turnover.
(b) Inventory turnover.
(c) Days’ sales uncollected
Accounts receivable, beginning-year $170,000
Accounts receivable, year-end 190,000
Merchandise inventory, beginning-year 80,000
Merchandise inventory, year-end 60,000
Cost of goods sold 580,000
Credit sales 1,000,000
213) Selected current year end financial information for a company is presented below. Calculate
the following company ratios:
(a) Profit margin.
(b) Total asset turnover.
(c) Return on total assets.
(d) Return on common stockholders’ equity (assume the company has no preferred stock).
Net income $ 325,000
Net sales 4,700,000
Total liabilities, beginning-year 550,000
Total liabilities, end-of-year 530,000
Total stockholders’ equity, beginning-year. 760,000
Total stockholders’ equity, end-of-year 745,000