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Financial statements for Kinder Corporation are presented below. KINDER CORPORATION Comparative Balance Sheet December 31                      &nbsp

  1. Financial statements for Kinder Corporation are presented below.

KINDER CORPORATION

Comparative Balance Sheet

December 31

                                                                                                                      2015                  2014  

Assets

Cash...................................................................................................       $    4,000           $ 6,000

Accounts receivable (net)..................................................................           16,000             12,000

Inventory............................................................................................           20,000             18,000

Land...................................................................................................           28,000               8,000

Equipment..........................................................................................           62,000             60,000

Accumulated depreciation—equipment............................................          (20,000)          (14,000)

      Total assets..................................................................................       $110,000           $90,000

Liabilities and Stockholders' Equity

Accounts payable..............................................................................       $ 10,000           $16,000

Long-term notes payable...................................................................           34,000             19,000

Common stock ($10 par value).........................................................           50,000             50,000

Retained earnings..............................................................................           16,000               5,000

      Total liabilities and stockholders' equity......................................       $110,000           $90,000

KINDER CORPORATION

Income Statement

For the year ended December 31, 2015

Sales revenue .....................................................................................................             $370,000

Less: Sales returns and allowances ...................................................................                 10,000

Net sales .............................................................................................................             $360,000

Cost of goods sold ..............................................................................................               275,000

Gross profit .........................................................................................................                 85,000

Operating expenses ...........................................................................................                 40,000

Income before income taxes ..............................................................................                 45,000

Income tax expense ...........................................................................................                 18,000

Net income ..........................................................................................................             $ 27,000

Additional Information: All sales were on account. The market price of Kinder's common stock was $42 on December 31, 2015, 5000 shares of common stock issued and outstanding.

  1. Compute the indicated ratios at December 31, 2015, or for the year ended December 31, 2015, as appropriate. Report answers to two decimal places.

      1.   Return on assets is ______________________________________________________.

      2.   Acid-test ratio is ________________________________________________________.

      3.   Profit margin ___________________________________________________________.

      4.   Payout ratio is __________________________________________________________.

      5.   Debt to assets ratio is ____________________________________________________.

      6.   Asset turnover is ________________________________________________________.

      7.   Accounts receivable turnover is ____________________________________________.

      8.   Price-earnings ratio is ____________________________________________________.

      9.   Current ratio is __________________________________________________________.

      10. Debit to Equity___________________________________________________________

      11. Inventory Turnover and Days in Inventory _____________________________________

      12. Earnings per share ______________________________________________________

      13. Accounts Receivable Turnover and Days in Sales ______________________________

Solutions

Expert Solution

1)Return on Assets = Net Income / Avg total assets.

=> {$27,000 / [($110,000+ $90,000)/2] }*100 = 27%.

2)Acid test ratio = (Cash + Account receivable)/Current liabilities => ($4,000+ $16,000)/$10,000 = 2:1.

3)Profit margin ratio = (net income / sales )*100 => ($27,000/$360,000)*100 = 7.5%.

4)Pay out ratio = Dividend paid is not available (Comment for this will provide the answer).

5)Debt to asset ratio = Total debt / Total Assets => $44,000/$110,000 = 0.4.

6)Assets turnover = Sale / Avg total assets => [$360,000/($110,000 + $90,000)/2] = 3.6.

7)Accounts receivable = Net sale / Avg AR = [$360,000/ (16000+12000)/2] = 25.71.

8)PE ratio = MP of share / EPS. = $42/$5.4 = $7.78.

Eps = Earnings available to SH/ Common stock. = $27,000/5000 = $5.4 per share.

9) Current ratio = Current assets / Current liabilities = $40,000/10000 = 4:1.

10)Debt to equity ratio = Total debt / Total equity = $44,000/$66,000 = 0.67.

11)Inv TO ratio = COGS/ Avg inv = $275,000/$19,000 = 14.47.

Days in Inv = 365/14.47 = 25.22 or 25 days.

12)From the above 8 Point EPS = $5.4

13)Days in sale = 365/25.71 = 14.20 or 14 days.

ekkarill92 answered 7 months ago
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