Return on common equity discuss accounts receivable

Question

The following financial statements for Jordan Corporation should be used to calculate the following ratios.

Jordan Corporation Balance Sheets December 31, 2016 and 2015
Assets
Current Assets:
Cash	mce_markernbsp;            250,000	mce_markernbsp;            275,000
Accounts Receivable	400,000	450,000
Inventory	600,000	500,000
Prepaid Expenses	25,000	30,000
Total Current Assets	1,275,000	1,255,000
Property, Plant and Equipment:
Equipment	1,000,000	900,000
Less Accumulated Depreciation	(200,000)	(175,000)
Total Property, Plant and Equipment	800,000	725,000
Total Assets	mce_markernbsp;        2,075,000	mce_markernbsp;        1,980,000
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts Payable	mce_markernbsp;            430,000	mce_markernbsp;            400,000
Notes Payable	100,000	80,000
Wages Payable	30,000	20,000
Total Current Liabilities	560,000	500,000
Long Term Liabilities:
Notes Payable	200,000	180,000
Bonds Payable	150,000	200,000
Total Long Term Liabilities	350,000	380,000
Total Liabilities	910,000	880,000
Stockholders' Equity
Common Stock	500,000	500,000
Additional Paid in Capital	100,000	100,000
Retained Earnings	565,000	500,000
Total Stockholders' Equity	1,165,000	1,100,000
Total Liabilities and Equity	mce_markernbsp;        2,075,000	mce_markernbsp;        1,980,000

 

Jordan Corporation Income Statement Years Ended December 31, 2016 and 2015
Sales	mce_markernbsp;        3,500,000	mce_markernbsp;        3,300,000
Cost of Goods Sold	1,200,000	1,150,000
Gross Profit	2,300,000	2,150,000
Operating Expenses	1,800,000	1,700,000
Operating Income	500,000	450,000
Interest Expense	25,000	30,000
Income Before Taxes	475,000	420,000
Income Taxes	100,000	80,000
Net Income	mce_markernbsp;            375,000	mce_markernbsp;            340,000

There are 100,000 shares outstanding at the end of both 2016 and 2015.

Market price per share on December 31, 2016 was $45.00 per share.

Company paid $100,000 in dividends during 2016.

Compute the following ratios:

Liquidity:

1. Working capital
2. Current ratio
3. Inventory turnover
4. Days in inventory
5. Accounts receivable turnover
6. Average collection period

Solvency:

1. Debt to assets ratio
2. Times interest earned

Profitability:

1. Earnings per share
2. Price earnings ratio
3. Gross profit ratio
4. Net profit margin ratio
5. Return on assets
6. Asset turnover
7. Dividend payout ratio
8. Return on common equity