Financial Ratios for Common Stockholders [LO2]
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or pre- ferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 14%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company's common stock at the end of the year was $26. All of the company's sales are on account.
|
Cash
|
$ 1,080
|
$ 1,210
|
|
Accounts receivable, net
|
9,000
|
6,500
|
|
Inventory
|
12,000
|
10,600
|
|
Prepaid expenses
|
600
|
500
|
|
Total current assets
|
22,680
|
18,810
|
| Property and equipment: |
|
|
|
Land
|
9,000
|
9,000
|
|
Buildings and equipment, net
|
36,800
|
38,000
|
|
Total property and equipment .
|
45,800
|
47,000
|
|
Total assets
|
$68,480
|
$65,810
|
| Liabilities and Stockholders' Equity |
|
|
| Current liabilities: |
|
|
|
Accounts payable
|
$18,500
|
$17,400
|
|
Accrued payables
|
900
|
700
|
|
Notes payable, short term
|
-
|
100
|
| Total current liabilities . Long-term liabilities: |
19,400 |
18,200 |
|
Bonds payable
|
8,000
|
8,000
|
|
Total liabilities
|
27,400
|
26,200
|
| Stockholders' equity: |
|
|
|
Preferred stock
|
1,000
|
1,000
|
|
Common stock
|
2,000
|
2,000
|
|
Additional paid-in capital
|
4,000
|
4,000
|
|
Total paid-in capital
|
7,000
|
7,000
|
|
Retained earnings
|
34,080
|
32,610
|
|
Total stockholders' equity
|
41,080
|
39,610
|
|
Total liabilities and stockholders' equity
|
$68,480
|
$65,810
|
|
Sales
|
$66,000
|
$64,000
|
|
Cost of goods sold
|
43,000
|
42,000
|
|
Gross margin
|
23,000
|
22,000
|
| Selling and administrative expenses: |
|
|
|
Selling expenses
|
11,500
|
11,000
|
|
Administrative expenses
|
7,400
|
7,000
|
|
Total selling and administrative expenses
|
18,900
|
18,000
|
|
Net operating income
|
4,100
|
4,000
|
|
Interest expense
|
800
|
800
|
|
Net income before taxes
|
3,300
|
3,200
|
|
Income taxes
|
1,320
|
1,280
|
|
Net income
|
1,980
|
1,920
|
|
Dividends to preferred stockholders
|
60
|
400
|
|
Net income remaining for common stockholders
|
1,920
|
1,520
|
|
Dividends to common stockholders
|
450
|
450
|
|
Net income added to retained earnings
|
1,470
|
1,070
|
|
Retained earnings, beginning of year
|
32,610
|
31,540
|
|
Retained earnings, end of year
|
$34,080
|
$32,610
|
Required:
Compute the following financial ratios for common stockholders for this year:
1. Gross margin percentage.
2. Earnings per share of common stock.
3. Price-earnings ratio.
4. Dividend payout ratio.
5. Dividend yield ratio.
6. Return on total assets.
7. Return on common stockholders' equity.
8. Book value per share.