Problem: Condensed data taken from the balance sheet at the end of the current year are as follows:
Assets:
Cash ...............................................................$200,000
Marketable securities ......................................... 80,000
Accounts receivable ...........................................500,000
Merchandise inventory .......................................170,000
Prepaid expenses .............................................. 20,000
Fixed assets (net) ........................................... 1,700,000
Liabilities and Stockholders’ Equity:
Accounts payable ........................................................... $300,000
Notes payable (short-term, non-interest-bearing) ...................... 100,000
Accrued liabilities ..................................................................... 10,000
Bonds payable, 10%, due 2013 ..................................................600,000
Preferred 9% stock, $50 par ......................................................250,000
Common stock, $20 par .............................................................740,000
Paid-in capital in excess of par-common stock ..............................190,000
Retained earnings ......................................................................500,000
Selected data related to the 12 months of the current year indicate the following:
Average accounts receivable ....................................... $275,000
Average common stockholders' equity ............................1,200,000
Average stockholders' equity .......................................... 1,450,000
Average total assets ................................................... 2,400,000
Cash dividends paid on common stock ............................. 111,000
Income before income tax .................................................500,000
Interest expense ............................................................... 50,000
Net income .......................................................................340,000
Net sales (on account) .....................................................2,000,000
The common stock was selling for $60 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.
0. Ratio of fixed assets to long-term liabilities
1. Acid-test ratio
2. Current ratio
3. Working capital
4. Accounts receivable turnover
5. Rate earned on total assets
6. Rate earned on common stockholders' equity
7. Number of times interest charges earned
8. Earnings per share on common stock
9. Price-earnings ratio on common stock
10. Dividend yield on common stock