Solve the below problem:
Nineteen Measures of Solvency and Profitability
Q: The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $52 on December 31, 2012.
| Blige Inc. |
| Comparative Retained Earnings Statement |
| For the Years Ended December 31, 2012 and 2011 |
|
2012 |
2011 |
| Retained earnings, January 1 |
$1,661,950 |
|
$1,406,850 |
|
| Add net income for year |
369,200 |
|
288,200 |
|
| Total |
$2,031,150 |
|
$1,695,050 |
|
| Deduct dividends: |
|
|
|
|
| On preferred stock |
$12,600 |
|
$12,600 |
|
| On common stock |
20,500 |
|
20,500 |
|
| Total |
$33,100 |
|
$33,100 |
|
| Retained earnings, December 31 |
$1,998,050 |
|
$1,661,950 |
|
| Blige Inc. |
| Comparative Income Statement |
| For the Years Ended December 31, 2012 and 2011 |
|
2012 |
2011 |
| Sales |
$2,394,265 |
|
$2,202,700 |
|
| Sales returns and allowances |
11,910 |
|
7,740 |
|
| Net sales |
$2,382,355 |
|
$2,194,960 |
|
| Cost of goods sold |
817,600 |
|
752,190 |
|
| Gross profit |
$1,564,755 |
|
$1,442,770 |
|
| Selling expenses |
$560,000 |
|
$670,170 |
|
| Administrative expenses |
477,035 |
|
393,590 |
|
| Total operating expenses |
1,037,035 |
|
1,063,760 |
|
| Income from operations |
$527,720 |
|
$379,010 |
|
| Other income |
27,780 |
|
24,190 |
|
|
$555,500 |
|
$403,200 |
|
| Other expense (interest) |
136,000 |
|
75,200 |
|
| Income before income tax |
$419,500 |
|
$328,000 |
|
| Income tax expense |
50,300 |
|
39,800 |
|
| Net income |
$369,200 |
|
$288,200 |
|
| Blige Inc. |
| Comparative Balance Sheet |
| December 31, 2012 and 2011 |
|
Dec. 31, 2012 |
Dec. 31, 2011 |
| Assets |
|
| Current assets: |
|
|
| Cash |
$390,570 |
|
$347,360 |
|
| Temporary investments |
591,130 |
|
575,640 |
|
| Accounts receivable (net) |
401,500 |
|
379,600 |
|
| Inventories |
292,000 |
|
219,000 |
|
| Prepaid expenses |
73,896 |
|
69,470 |
|
| Total current assets |
$1,749,096 |
|
$1,591,070 |
|
| Long-term investments |
1,023,394 |
|
300,598 |
|
| Property, plant, and equipment (net) |
2,210,000 |
|
1,989,000 |
|
| Total assets |
$4,982,490 |
|
$3,880,668 |
|
| Liabilities |
| Current liabilities |
$514,440 |
|
$508,718 |
|
| Long-term liabilities: |
|
|
| Mortgage note payable, 8%, due 2017 |
$760,000 |
|
$0 |
|
| Bonds payable, 8%, due 2021 |
940,000 |
|
940,000 |
|
| Total long-term liabilities |
$1,700,000 |
|
$940,000 |
|
| Total liabilities |
$2,214,440 |
|
$1,448,718 |
|
| Stockholders' Equity |
|
|
| Preferred $0.70 stock, $20 par |
$360,000 |
|
$360,000 |
|
| Common stock, $10 par |
410,000 |
|
410,000 |
|
| Retained earnings |
1,998,050 |
|
1,661,950 |
|
| Total stockholders' equity |
$2,768,050 |
|
$2,431,950 |
|
| Total liabilities and stockholders' equity |
$4,982,490 |
|
$3,880,668 |
|
Instructions:
Determine the following measures for 2012, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Assume 365 days a year.
| 1. Working capital: |
$ |
|
| 2. Current ratio: |
|
|
| 3. Quick ratio: |
|
|
| 4. Accounts receivable turnover: |
|
|
| 5. Number of days' sales in receivables: |
|
|
| 6. Inventory turnover: |
|
|
| 7. Number of days' sales in inventory: |
|
|
| 8. Ratio of fixed assets to long-term liabilities: |
|
|
| 9. Ratio of liabilities to stockholders' equity: |
|
|
| 10. Number of times interest charges are earned: |
|
|
| 11. Number of times preferred dividends earned: |
|
|
| 12. Ratio of net sales to assets: |
|
|
| 13. Rate earned on total assets: |
|
% |
| 14. Rate earned on stockholders' equity: |
|
% |
| 15. Rate earned on common stockholders' equity: |
|
% |
| 16. Earnings per share on common stock: |
$ |
|
| 17. Price-earnings ratio: |
|
|
| 18. Dividends per share of common stock: |
$ |
|
| 19. Dividend yield: |