Financial Statement Analysis:
Problem 1: On December 31, 20XX, Ms. Ima Richperson, a self employed financial consultant prepared the following information. She endeavored to determine how well her company is doing:
Revenues---------------------------------$250,000
Salaries (Per year)
Richperson----------$46,800
Assistant-------------$29,200
Secretary------------$24,000
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Employment Taxes and Benefit (Per month)
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$3125
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Office Supplies
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$8100
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Travel
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$3500
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Lease Payments (Per month)
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$1000
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Depreciation
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$5500
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Interest Paid
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$37500
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Preferred Stock Dividends
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$10000
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Common Stock Shares
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22000 shares issued
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Tax Bracket
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38%
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1. What is Ms. Richperson's tax liability?
2. What were the Earnings after Tax (EAT)?
3. If Ms. Richperson had preferred stockholders' dividends of $10 000, how much were the earnings available to common stockholders?
4. If Ms. Richperson had 22 000 common stock shares outstanding, how much in dividends (DPS) did each share receive?
5. How much HIT did Ms. Richperson earn?
6. How much cash flow from operations did Ms. Richperson realize? (EAT + non-cash items)
7. If the price of Richperson stock is $15 per share, what is its P/E ratio (Use EPS)?
8. What is Richperson's interest coverage ratio?
9. What was Ms. Richperson's return on sales?
Problem 2: Gooey Candy had net profit before taxes (EBT) of $450,000. The company is in the 40% tax bucket and must pay $82,000 in preferred stock dividends before distribution any earnings on the 110,000 shares of common stock outstanding.
1. What were Gooey's Earning Per Share (EPS)?
2. If the firm paid dividends of $.80, how much would go to retained earnings?