Question - Cepeda Company manufactures backpacks. During 2014, Cepeda issued bonds at 10% interest and used the cash proceeds to purchase treasury stock. The following financial information is available for Cepeda Company for the years 2014 and 2013.
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2014
|
2013
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|
Sales revenue
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$26,685,000
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$26,685,000
|
|
Net income
|
6,641,600
|
7,412,500
|
|
Interest expense
|
739,500
|
207,060
|
|
Tax expense
|
1,986,550
|
2,223,750
|
|
Dividends paid on common stock
|
1,316,310
|
1,517,454
|
|
Dividends paid on preferred stock
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443,700
|
443,700
|
|
Total assets (year-end)
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42,992,500
|
50,034,375
|
|
Average total assets
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23,201,813
|
26,271,477
|
|
Total liabilities (year-end)
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8,874,000
|
4,437,000
|
|
Avg. total common stockholders' equity
|
13,902,600
|
20,853,900
|
(a) Use the information above to calculate the following ratios for both years:
(i) Return on assets
(ii) Return on common stockholders' equity
(iii) Payout ratio
(iv) Debt to assets ratio
(v) Times interest earned