59. Hardister Corp.
Hardister Corp. has the following information available from its financial statements for 2009:
Balance sheet
information:
Income statement
information:
Assets
Current assets
$ 400,000
Sales (all on account)
$3,000,000
Long-term assets
600,000
Cost of goods sold
1,500,000
Total assets
$1,000,000
Salary expense
200,000
Miscellaneous expenses
400,000
Liabilities
Interest expense
100,000
Current liabilities
$ 200,000
Income before taxes
$ 800,000
Long-term liabilities
100,000
Income tax expense
300,000
Total liabilities
$ 300,000
Net income
$ 500,000
Stockholders’
Equity
Capital stock
$ 300,000
Retained earnings
400,000
Total Stockholders’ Equity
$ 700,000
Refer to the Hardister Corp. information above. Hardister’s times-interest-earned ratio is: (round to two decimal places)
60. Hardister Corp.
Hardister Corp. has the following information available from its financial statements for 2009:
Income statement
information:
Current assets
$ 400,000
Sales (all on account)
$3,000,000
Long-term assets
600,000
Cost of goods sold
1,500,000
Total assets
$1,000,000
Salary expense
200,000
Miscellaneous
expenses
400,000
Interest expense
100,000
Current liabilities
$ 200,000
Income before taxes
$ 800,000
Long-term liabilities
100,000
Income tax expense
300,000
Total liabilities
$ 300,000
Net income
$ 500,000
Capital stock
$ 300,000
Retained earnings
400,000
Total Stockholders’ Equity
$ 700,000
Refer to the Hardister Corp. information above. Assuming Hardister has no preferred stock and the average number of common shares outstanding
was 10,000, what would be earnings per share for 2009? (round to two decimal places)
61. Hardister Corp.
Hardister Corp. has the following information available from its financial statements for 2009:
Balance sheet
information:
Income statement
information:
Assets
Current assets
$ 400,000
Sales (all on account)
$3,000,000
Long-term assets
600,000
Cost of goods sold
1,500,000
Total assets
$1,000,000
Salary expense
200,000
Miscellaneous
expenses
400,000
Liabilities
Interest expense
100,000
Current liabilities
$ 200,000
Income before taxes
$ 800,000
Long-term liabilities
100,000
Income tax expense
300,000
Total liabilities
$ 300,000
Net income
$ 500,000
Stockholders’
Equity
Capital stock
$ 300,000
Retained earnings
400,000
Total Stockholders’ Equity
$ 700,000
Refer to the Hardister Corp. information above. Assuming Hardister had total assets at the end of 2008 of $800,000 and an income tax rate of 37.5
percent, what would be return on assets for 2009? (round to the nearest whole percent)
62. Hardister Corp.
Hardister Corp. has the following information available from its financial statements for 2009:
Balance sheet
information:
Income statement
information:
Assets
Current assets
$ 400,000
Sales (all on account)
$3,000,000
Long-term assets
600,000
Cost of goods sold
1,500,000
Total assets
$1,000,000
Salary expense
200,000
Miscellaneous expenses
400,000
Liabilities
Interest expense
100,000
Current liabilities
$ 200,000
Income before taxes
$ 800,000
Long-term liabilities
100,000
Income tax expense
300,000
Total liabilities
$ 300,000
Net income
$ 500,000
Stockholders’ Equity
Capital stock
$ 300,000
Retained earnings
400,000
Total Stockholders’ Equity
$ 700,000
Refer to the Hardister Corp. information above. At the end of 2009, Hardister’s common stock was listed on the stock exchange as having a market
price of $65 per share and there are 10,000 shares outstanding. Hardister has no preferred stock. What would be Hardister’s price earnings (P/E)
ratio for 2009? (round to two decimal places)
63. Which of the following ratios would be the best measure of profitability?
64. Which of the following ratios would not be the best measure of profitability?
65. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Performing a horizontal analysis on Grogan’s total assets shows that they have:
66. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Converting the 2009 column into a common-size statement would show current assets as being: (round
to two decimal places)
67. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s working capital for 2009 is:
68. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s current ratio for 2009 is: (round to two decimal places)
69. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s cash flow from operations to current liabilities ratio for 2009 is: (round to two decimal
places)
70. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s debt-to-equity ratio for 2009 is: (round to two decimal places)
71. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s times-interest-earned ratio for 2009 is: (round to two decimal places)
72. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s cash flow from operations to capital expenditures ratio for 2009 is: (round to two decimal
places)
73. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s return on assets (ROA) ratio for 2009 is: (round to two decimal places)
74. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan’s return on common stockholders’ equity (ROCSE) ratio for 2009 is: (round to two decimal
places)
75. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan had an average of 5,000 shares of common stock outstanding during 2009. The company’s
earnings per share for 2009 is: (round to two decimal places)
76. Grogan Inc.
Grogan Inc. had the following information available from its 2008 and 2009 financial statements:
Balance sheet information:
2008
2009
Current assets
$ 30,000
$ 80,000
Long-term assets
100,000
200,000
Total assets
$130,000
$280,000
Current liabilities
$ 15,000
$ 10,000
Long-term liabilities
30,000
40,000
Total liabilities
$ 45,000
$ 50,000
Common stock
$ 60,000
$100,000
Retained earnings
25,000
130,000
Total stockholders’ equity
$ 85,000
$230,000
Income statement information:
Income before interest and taxes
$ 30,000
$200,000
Interest expense
3,000
8,000
Tax expense
2,000
50,000
Net income
$ 25,000
$142,000
Other information:
Dividends paid to stockholders
$ 0
$ 37,000
Average income tax rate
23%
26%
Net cash flows from operations
$ 25,000
$150,000
Cash paid for acquisitions
$ 10,000
$ 75,000
Refer to the Grogan Inc. information above. Grogan had an average of 5,000 shares of common stock outstanding during 2009. At the end of the
year, the market price per share was $100. The company’s price earnings (P/E) ratio for 2009 is: (round to two decimal places)
77. Which ratio gives an indication of how investors believe a company’s stock will perform in the future
compared to other companies?
78. Why do decision-makers analyze financial statements and how is ratio analysis useful in the process?
79. Discuss one limitation of financial statement analysis.
80. How is horizontal analysis performed and how is it used in financial statement analysis?
81. How is vertical analysis performed and how is it used in financial statement analysis?