Question

The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following:

Bonds payable, 8%	$2,000,000
Preferred $5 stock, $100 par	$380,000
Common stock, $7 par	$93,100.00

Income before income tax was $336,000, and income taxes were $51,000 for the current year. Cash dividends paid on common stock during the current year totaled $31,920. The common stock was selling for $160 per share at the end of the year.

Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required.

a. Times interest earned ratio		times
b. Earnings per share on common stock	$
c. Price-earnings ratio
d. Dividends per share of common stock	$
e. Dividend yield		%

7. EX.17-21.ALGO

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Earnings per Share, Price-Earnings Ratio, Dividend Yield

The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year:

Common stock, $25 par value (no change during the year)	$6,250,000
Preferred $10 stock, $200 par (no change during the year)	6,000,000

The net income was $1,000,000 and the declared dividends on the common stock were $62,500 for the current year. The market price of the common stock is $19.60 per share.

For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places.

a. Earnings per Share	$
b. Price-Earnings Ratio
c. Dividends per Share	$
d. Dividend Yield		%

8. PR.17-04.ALGO

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Measures of liquidity, Solvency, and Profitability

The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was $ 63 on December 31, 20Y2.

Marshall Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
			20Y2		20Y1
Retained earnings, January 1			$4,473,250		$3,759,650
Net income			1,050,000		770,100
Total			$5,523,250		$4,529,750
Dividends:
	On preferred stock		$13,300		$13,300
	On common stock		43,200		43,200
		Total dividends	$56,500		$56,500
Retained earnings, December 31			$5,466,750		$4,473,250

Marshall Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2		20Y1
Sales	$5,447,260		$5,018,790
Cost of goods sold	2,053,490		1,889,210
Gross profit	$3,393,770		$3,129,580
Selling expenses	$1,031,740		$1,333,600
Administrative expenses	878,890		783,220
Total operating expenses	$1,910,630		$2,116,820
Income from operations	$1,483,140		$1,012,760
Other revenue	78,060		64,640
	$1,561,200		$1,077,400
Other expense (interest)	368,000		202,400
Income before income tax	$1,193,200		$875,000
Income tax expense	143,200		104,900
Net income	$1,050,000		$770,100

Marshall Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
			20Y2		20Y1
Assets
Current assets
	Cash		$905,960		$1,193,510
	Marketable securities		1,371,180		1,977,830
	Accounts receivable (net)		1,080,400		1,014,700
	Inventories		803,000		613,200
	Prepaid expenses		171,400		238,700
		Total current assets	$4,331,940		$5,037,940
Long-term investments			3,642,210		2,281,728
Property, plant, and equipment (net)			5,520,000		4,968,000
Total assets			$13,494,150		$12,287,668
Liabilities
Current liabilities			$1,397,400		$3,254,418
Long-term liabilities:
	Mortgage note payable, 8%		$2,070,000		$0
	Bonds payable, 8%		2,530,000		2,530,000
		Total long-term liabilities	$4,600,000		$2,530,000
Total liabilities			$5,997,400		$5,784,418
Stockholders' Equity
Preferred $0.70 stock, $50 par			$950,000		$950,000
Common stock, $10 par			1,080,000		1,080,000
Retained earnings			5,466,750		4,473,250
Total stockholders' equity			$7,496,750		$6,503,250
Total liabilities and stockholders' equity			$13,494,150		$12,287,668

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except for dollar amounts, which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

1. Working capital	$
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Number of days' sales in receivables		days
6. Inventory turnover
7. Number of days' sales in inventory		days
8. Ratio of fixed assets to long-term liabilities
9. Ratio of liabilities to stockholders' equity
10. Times interest earned
11. Asset turnover
12. Return on total assets		%
13. Return on stockholders’ equity		%
14. Return on common stockholders’ equity		%
15. Earnings per share on common stock	$
16. Price-earnings ratio
17. Dividends per share of common stock	$
18. Dividend yield		%

Answer 1

Answer of Part 1:

Working Capital = Current Assets – current Liabilities
Working Capital = $4,331,940 - $1,397,400
Working Capital = $2,934,540

Answer of Part 2:

Current Ratio = Current Assets / Current Liabilities
Current Ratio = $4,331,940 / $1,397,400
Current Ratio = 3.1:1

Answer of Part 3:

Quick Ratio = (Current Assets – Inventory – Prepaid Expenses) / Current Liabilities
Quick Ratio = ($4,331,940 - $803,000 - $171,400) / $1,397,400
Quick Ratio = $3,357,540 / $1,397,400
Quick Ratio= 2.40:1

Answer of Part 4:

Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable)/2
Average Accounts Receivable = ($1,014,700 + $1,080,400)/2
Average Accounts Receivable = $1,047,550

Accounts Receivable Turnover = Sales / Average Accounts Receivable
Accounts Receivable Turnover = $5,447,260 / $1,047,550
Accounts Receivable Turnover = 5.2 times

Answer of Part 5:

Number of Days Sales in Receivables = 365 days / Accounts Receivable Turnover
Number of Days Sales in Receivable = 365 / 5.2
Number of Days Sales in Receivables = 70.19 days