Question

The financial statements of Ayayai Company appear below: AYAYAI COMPANY Comparative Balance Sheet December 31 2022 2021 Assets Cash $ 26,000 $ 40,200 Debt investments 17,400 66,700 Accounts receivable (net) 42,700 29,500 Inventory 155,000 178,000 Property, plant and equipment (net) 171,000 153,000        Total assets $412,100 $467,400 Liabilities and stockholders' equity Accounts payable $ 24,800 $ 29,800 Short-term notes payable 33,800 88,200 Bonds payable 72,900 156,300 Common stock 173,600 112,300 Retained earnings 107,000 80,800        Total liabilities and stockholders' equity $412,100 $467,400 AYAYAI COMPANY Income Statement For the Year Ended December 31, 2022 Net sales (all on credit) $341,000 Cost of goods sold 177,000 Gross profit 164,000 Expenses Interest expense $10,300 Selling expenses 31,000 Administrative expenses 19,000       Total expenses 60,300 Income before income taxes 103,700 Income tax expense 32,900 Net income $ 70,800 Additional information: a. Cash dividends of $47,200 were declared and paid on common stock in 2022. b. Weighted-average number of shares of common stock outstanding during 2022 was 47,200 shares. c. Market price of common stock on December 31, 2022, was $16 per share. d. Net cash provided by operating activities for 2022 was $80,000. Using the financial statements and additional information, compute the following ratios for the Ayayai Company for 2022. (Round all answers to 2 decimal places, e.g. 1.83 or 12.61%.) 1. Current ratio Enter current ratio value : 1 2. Return on common stockholders' equity Enter return on common stockholders' equity in percentages % 3. Price-earnings ratio Enter price-earnings ratio in times times 4. Inventory turnover Enter inventory turnover in times times 5. Accounts receivable turnover Enter accounts receivable turnover in times times 6. Times interest earned Enter times interest earned times 7. Profit margin Enter profit margin in percentages % 8. Average days in inventory Enter average days in inventory days 9. Payout ratio Enter payout ratio in percentages % 10. Return on assets Enter return on assets in percentages % Click if you would like to Show Work for this question: Open Show Work

Answer 1

Answer :

1. Current ratio :

= Current assets / Current liability

Current assets = Cash + Debt Investment + Account receivable + Inventory

= $26,000 + $17,400 + $42,700 + $155,000

= $241,100

Current liability = Accounts payable + Short term notes payable

= $24,800 + $33,800

= $58,600

Current ratio

= $241,100 / $58,600

= 4.11 : 1

2. Return on Common stockholders' Equity :

= (Net Income - Preferred Dividend) / Weighted average no. of common stock

= ($70,800 - 0) / 47,200 shares x 100

= 150% or $1.5

3. Price Earning ratio :

= Market price per share / Earnings per share

= $16 / $1.5

= 10.67 times

4. Inventory Turnover ratio :

= Cost of goods sold / Average Inventory

Average Inventory = ($178,000 + $155,000) / 2 = $166,500

Inventory Turnover ratio

= $177,000 / $166,500

= 1.06 times

5. Account receivable turnover ratio :

= Net credit sales / Average accounts receivable

Average accounts receivable = ($29,500 + $42,700) / 2 = $36,100

Account receivable turnover ratio

= $341,000 / $36,100

= 9.44 times

6. Times interest earned :

= Income before interest & income taxes / Interest expense

= ($103,700 + $10,300) / $10,300

= $114,000 / $10,300

= 11.07 times

7. Profit margin :

= Net income / Net sales x 100

= $70,800 / $341,000 x 100

= 20.76%

8. Average days in inventory :

= 365 days / Inventory Turnover ratio

= 365 days / 1.06 times

= 344.34 days

9. Payout ratio :

= Dividend / Net Income

= $47,200 / $70,800 x 100

= 66.67%

10. Return on assets :

= Net Income / Average total assets

Average total assets = ($412,100 + $467,400) / 2 = $439,750

Return on assets

= $70,800 / $439,750 x 100

= 16.10%