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The financial statements of Ahmed Manufacturing Company appear below: Ahmed Manufacturing Company Comparative Balance Sheet December...

  1. The financial statements of Ahmed Manufacturing Company appear below:

Ahmed Manufacturing Company

Comparative Balance Sheet

December 31,

————————————————————————————————

Assets                                                                                                         2019                   2018  

Cash................................................................................................... $ 250,000           $ 400,000

Short-term investments......................................................................      150,000              600,000

Accounts receivable (net)..................................................................      500,000              300,000

Inventory...........................................................................................      500,000              700,000

Property, plant and equipment (net).................................................. 2,600,000         3,000,000

      Total assets ................................................................................. $4,000,000         $5,000,000

Liabilities and stockholders' equity

Accounts payable............................................................................... $ 200,000           $ 300,000

Short-term notes payable...................................................................      300,000              900,000

Bonds payable...................................................................................      900,000           1,600,000

Common stock................................................................................... 1,500,000           1,500,000

Retained earnings.............................................................................. 1,100,000              700,000

Total liabilities and stockholders' equity                                         $4,000,000         $5,000,000

Ahmed Manufacturing Company

Income Statement

For the Year Ended December 31, 2013

Net sales.......................................................................                   $4,000,000

Cost of goods sold........................................................                   2,400,000

Gross profit..................................................................                     1,600,000

Expenses

     Operating expenses.................................................. $420,000

     Interest expense....................................................... 180,000

          Total expenses....................................................                      600,000

Income before income taxes..........................................                     1,000,000

Income tax expense......................................................                        300,000

Net income...................................................................                    $ 700,000

Additional information:

a.   Cash dividends of $230,000 were declared and paid in 2019.

b.   Weighted-average number of shares of common stock outstanding during 2019 was 300,000 shares.

c.   Market value of common stock on December 31, 2019, was $210 per share.

Instructions

Using the financial statements and additional information, compute the following ratios for Ahmed Manufacturing Company for 2013.

Show all computations.         

1. Current ratio;

2. Return on common stockholders' equity;

3. Price-earnings ratio;

4. Acid-test ratio;

5. Receivables turnover;

6. Times interest earned;

7. Profit margin;

8. Days in inventory

Solutions

Expert Solution

ekkarill92 answered 2 years ago
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