Question

In: Accounting

Hyrkas Corporation's most recent balance sheet and income statement appear below:        Statement of Financial Position...

Hyrkas Corporation's most recent balance sheet and income statement appear below:

    

  Statement of Financial Position
December 31, Year 2 and Year 1
(in thousands of dollars)
Year 2 Year 1
  Asset:
  Current assets:
  Cash $ 100 $ 110
  Accounts receivable 210 220
  Inventory 110 120
  Prepaid expenses 10 10
  Total current assets 430 460
  Plant and equipment, net 900 880
  Total assets $ 1,330 $ 1,340
  Liabilities and stockholders' equity:
  Current liabilities:
  Accounts payable $ 160 $ 170
  Accrued liabilities 50 50
  Notes payable, short term 100 90
  Total current liabilities 310 310
  Bonds payable 190 240
  Total liabilities 500 550
  Stockholders' equity:
  Common stock, $1 par value 100 100
  Additional paid-in capital--common stock 110 110
  Retained earnings 620 580
  Total stockholders' equity 830 790
  Total liabilities and stockholders' equity $ 1,330 $ 1,340


Income Statement
For the Year Ended December 31, Year 2
(in thousands of dollars)
  Sales (all on account) $ 1,330
  Cost of goods sold 850
  Gross margin 480
  Selling and administrative expenses 292
  Net operating income 188
  Interest expense 31
  Net income before taxes 157
  Income taxes (30%) 47
  Net income $ 110

       

Dividends on common stock during Year 2 totaled $50 thousand. The market price of common stock at the end of Year 2 was $9.36 per share.

    

Required:
a.

Compute the gross margin percentage for Year 2. (Round your answer to one decimal place. e.g. 0.1234 = 12.3%.)

  
      

b.

Compute the earnings per share (of common stock) for Year 2. (Round your answer to 2 decimal places.)

  
      

c.

Compute the price-earnings ratio for Year 2. (Do not round intermediate calculations. Round your answer to one decimal place.)

  
      

d.

Compute the dividend payout ratio for Year 2. (Do not round intermediate calculations. Round your answer to one decimal place. e.g. 0.1234 = 12.3%.)

  
      

e.

Compute the dividend yield ratio for Year 2. (Round your answer to 2 decimal places. e.g. 0.1234 = 12.34%.)

  
      

f.

Compute the return on total assets for Year 2. (Do not round intermediate calculations. Round your answer to 2 decimal places. e.g. 0.1234 = 12.34%.)

  
      

g.

Compute the return on common stockholders' equity for Year 2. (Round your answer to 2 decimal places. e.g. 0.1234 = 12.34%.)

  
      

h.

Compute the book value per share for Year 2. (Round your answer to 2 decimal places.)

  
      

i.

Compute the working capital for Year 2. (Input your answer in thousands of dollars, e.g. $100,000 is 100.)

  
      

j.

Compute the current ratio for Year 2. (Round your answer to 2 decimal places.)

  
      

k. Compute the acid-test ratio for Year 2. (Round your answer to one decimal place.)

  
      

l. Compute the accounts receivable turnover for Year 2. (Round your answer to 2 decimal places.)

  
      

m.

Compute the average collection period for Year 2. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to one decimal place.)

  
      

n.

Compute the inventory turnover for Year 2. (Round your answer to 2 decimal places.)

  
      

o.

Compute the average sale period for Year 2. (Use 365 days in a year. Do not round intermediate calculations. Round your answer to one decimal place.)

  
      

p.

Compute the times interest earned for Year 2. (Round your answer to 2 decimal places.)

  
      

q.

Compute the debt-to-equity ratio for Year 2. (Round your answer to 2 decimal places. e.g. 0.1234 = 0.12)

  
      

Solutions

Expert Solution

Answer to Requirement a.
Gross Margin percentage = Gross Margin / Sales * 100
Gross Margin percentage = $480 / $1,330 * 100
Gross Margin percentage = 36.1%

Answer to Requirement b.
Earnings per Share = Net Income / Common Stock Outstanding
Common Stock Outstanding = $100 / $1
Common Stock Outstanding = 100

Earnings per Share = $110 / 100
Earnings per Share = $1.10

Answer to Requirement c.
Price- Earnings Ratio = Price per Share / Earnings per Share
Price- Earnings Ratio = $9.36 / $1.10
Price- Earnings Ratio = 8.5times

Answer to Requirement d.
Dividend Payout Ratio = Dividend Paid / Net Income * 100
Dividend Payout Ratio = $40 / $110 * 100
Dividend Payout Ratio = 33.3%

Answer to Requirement e.
Dividend Yield Ratio = Dividend per Share / Price per Share * 100
Dividend per Share = Dividend Paid / Common Stock Outstanding
Dividend per Share = $50 / 100
Dividend per Share = $0.50

Dividend Yield Ratio = $0.50 / $9.36 * 100
Dividend Yield Ratio = 5.34%


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