In: Accounting
Automotive Solutions Inc. common stock was $65 on December 31, 20Y8.
The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $65 on December 31, 20Y8. AUTOMOTIVE SOLUTIONS INC. |
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20Y8 | 20Y7 | |||
Sales | $4,623,455 | $4,259,770 | ||
Cost of goods sold | (1,655,640) | (1,523,190) | ||
Gross profit | $2,967,815 | $2,736,580 | ||
Selling expenses | $(986,560) | $(1,230,500) | ||
Administrative expenses | (840,405) | (722,680) | ||
Total operating expenses | (1,826,965) | (1,953,180) | ||
Operating income | $1,140,850 | $783,400 | ||
Other revenue and expense: | ||||
Other income | 60,050 | 50,000 | ||
Other expense (interest) | (360,000) | (198,400) | ||
Income before income tax | $840,900 | $635,000 | ||
Income tax expense | (100,900) | (76,200) | ||
Net income | $740,000 | $558,800 |
AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders’ Equity For the Years Ended December 31, 20Y8 and 20Y7 |
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20Y8 | 20Y7 | |||||||||||||||||
Preferred Stock |
Common Stock |
Retained Earnings |
Preferred Stock |
Common Stock |
Retained Earnings |
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Balances, Jan. 1 | $680,000 | $780,000 | $3,209,100 | $680,000 | $780,000 | $2,728,500 | ||||||||||||
Net income | 740,000 | 558,800 | ||||||||||||||||
Dividends: | ||||||||||||||||||
Preferred stock | (11,900) | (11,900) | ||||||||||||||||
Common stock | (66,300) | (66,300) | ||||||||||||||||
Balances, Dec. 31 | $680,000 | $780,000 | $3,870,900 | $680,000 | $780,000 | $3,209,100 |
AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet December 31, 20Y8 and 20Y7 |
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Dec. 31, 20Y8 | Dec. 31, 20Y7 | ||||
Assets | |||||
Current assets: | |||||
Cash | $1,135,180 | $712,110 | |||
Temporary investments | 1,718,120 | 1,180,070 | |||
Accounts receivable (net) | 897,900 | 846,800 | |||
Inventories | 671,600 | 511,000 | |||
Prepaid expenses | 214,766 | 142,420 | |||
Total current assets | $4,637,566 | $3,392,400 | |||
Long-term investments | 1,607,324 | 426,737 | |||
Property, plant, and equipment (net) | 4,950,000 | 4,455,000 | |||
Total assets | $11,194,890 | $8,274,137 | |||
Liabilities | |||||
Current liabilities | $1,363,990 | $1,125,037 | |||
Long-term liabilities: | |||||
Mortgage note payable, 8%, due in 15 years | $2,020,000 | $0 | |||
Bonds payable, 8%, due in 20 years | 2,480,000 | 2,480,000 | |||
Total long-term liabilities | $4,500,000 | $2,480,000 | |||
Total liabilities | $5,863,990 | $3,605,037 | |||
Stockholders' Equity | |||||
Preferred $0.70 stock, $40 par | $680,000 | $680,000 | |||
Common stock, $10 par | 780,000 | 780,000 | |||
Retained earnings | 3,870,900 | 3,209,100 | |||
Total stockholders' equity | $5,330,900 | $4,669,100 | |||
Total liabilities and stockholders' equity | $11,194,890 | $8,274,137 |
Need help calculating the following:
Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.
5. Days' sales in receivables
14. Return on total assets | % | |
15. Return on stockholders’ equity | % | |
16. Return on common stockholders’ equity |
14) Return on Total Assets :-
Net Income = $740000
Avg. Total Assets = (Beginning Value of Total Assets + Ending Value of Total Assets) / 2
= ($8274137 + $11194890) / 2
= $9734514
Return on Total Assets = Net Income / Avg. Total Assets
= $740000 / $9734514
= 7.60%
15) Return on Stockholder's Equity :-
Avg. Total Stockholder's Equity = (Stockholder's Equity 2017 + Stockholder's Equity 2018) / 2
Avg. Total Stockholder's Equity = ($4669100 + $5330900) / 2
= $10000000 / 2
= $5000000
Return on Stockholder's Equity = Net Income / Avg. Total Stockholder's Equity
= $740000 / $5000000
= 14.80%
16) Return on Common Stockholder's Equity :-
Avg. Common Stockholder's Equity = (Common Stockholder's Equity 2017 + Common Stockholder's Equity 2018)/2
= ($780000 + $780000) / 2
= $780000
Return on Common Stockholder's Equity = Net Income / Avg. Common Stockholder's Equity
= $740000 / $780000
= 0.9487179 or 94.87%