Question

Financial statements for Perez Company follow.

PEREZ COMPANY
Balance Sheets As of December 31
	2019				2018
Assets
Current assets
Cash	$	21,500			$	17,500
Marketable securities		21,100				7,100
Accounts receivable (net)		52,000				44,000
Inventories		137,000				145,000
Prepaid items		26,000				11,000
Total current assets		257,600				224,600
Investments		32,000				25,000
Plant (net)		265,000				250,000
Land		29,000				24,000
Total assets	$	583,600			$	523,600
Liabilities and Stockholders’ Equity
Liabilities
Current liabilities
Notes payable	$	30,200			$	12,900
Accounts payable		98,800				85,000
Salaries payable		26,000				20,000
Total current liabilities		155,000				117,900
Noncurrent liabilities
Bonds payable		150,000				150,000
Other		26,000				21,000
Total noncurrent liabilities		176,000				171,000
Total liabilities		331,000				288,900
Stockholders’ equity
Preferred stock, (par value $10, 5% cumulative, non-participating; 6,000 shares authorized and issued)		60,000				60,000
Common stock (no par; 50,000 shares authorized; 10,000 shares issued)		60,000				60,000
Retained earnings		132,600				114,700
Total stockholders’ equity		252,600				234,700
Total liabilities and stockholders’ equity	$	583,600			$	523,600

PEREZ COMPANY
Statements of Income and Retained Earnings For the Years Ended December 31
	2019				2018
Revenues
Sales (net)	$	340,000			$	320,000
Other revenues		10,200				7,200
Total revenues		350,200				327,200
Expenses
Cost of goods sold		170,000				136,000
Selling, general, and administrative		66,000				61,000
Interest expense		11,300				10,500
Income tax expense		78,000				77,000
Total expenses		325,300				284,500
Net earnings (net income)		24,900				42,700
Retained earnings, January 1		114,700				79,000
Less: Preferred stock dividends		3,000				3,000
Common stock dividends		4,000				4,000
Retained earnings, December 31	$	132,600			$	114,700

Required

Calculate the following ratios for 2019 and 2018. Since 2017 numbers are not presented do not use averages when calculating the ratios for 2018. Instead, use the number presented on the 2018 balance sheet.

1. Working capital.
2. Current ratio. (Round your answers to 2 decimal places.)
3. Quick ratio. (Round your answers to 2 decimal places.)
4. Receivables turnover (beginning receivables at January 1, 2018, were $45,000). (Round your answers to 2 decimal places.)
5. Average days to collect accounts receivable. (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.)
6. Inventory turnover (beginning inventory at January 1, 2018, was $151,000). (Round your answers to 2 decimal places.)
7. Number of days to sell inventory. (Round your intermediate calculations to 2 decimal places and your final answers to the nearest whole number.)
8. Debt to assets ratio. (Round your answers to the nearest whole percent.)
9. Debt to equity ratio. (Round your answers to 2 decimal places.)
10. Number of times interest was earned. (Round your answers to 2 decimal places.)
11. Plant assets to long-term debt. (Round your answers to 2 decimal places.)
12. Net margin. (Round your answers to 2 decimal places.)
13. Turnover of assets. (Round your answers to 2 decimal places.)
14. Return on investment. (Round your answers to 2 decimal places.)
15. Return on equity. (Round your answers to 2 decimal places.)
16. Earnings per share. (Round your answers to 2 decimal places.)
17. Book value per share of common stock. (Round your answers to 2 decimal places.)
18. Price-earnings ratio (market price per share: 2018, $12.30; 2019, $13.60). (Round your intermediate calculations and final answer to 2 decimal places.)
19. Dividend yield on common stock. (Round your answers to 2 decimal places.)

2019 2018 a. Working capital b. Current ratio c. Quick ratio d. Receivables turnover times times e. Average days to collect accounts receivable days days f. Inventory turnover times times g. Average days to sell inventory days days h. Debt to assets ratio % % i. Debt to equity ratio j. Number of times interest earned times times k. Plant assets to long-term debt l. Net margin % % m. Asset turnover n. Return on investment % % o. Return on equity % % p. Earnings per share per share per share q. Book value per share per share per share r. Price-earnings ratio s. Dividend yield % %

Answer 1