Question

Knox Instruments, Inc., is a manufacturer of various medical and dental instruments.Financial statement data for the firm follow.

           

                                                                                                (Thousands of Dollars,

1993                                                                                   except per Share Amount)

Net Sales                                                                                             $ 200,000

Cost of Goods Sold                                                                                 98,000

Net Income                                                                                              10,000

Dividends                                                                                                  4,200

Net Cash Provided by Operating Activities                                              7,800

Earnings per Share                                                                                      2.71

KNOX INSTRUMENTS, INC.

BALANCE SHEETS

(THOUSANDS OF DOLLARS)

                                                                                                Dec. 31,           Dec. 31,

                                                Assets                                         1993                1992

Cash                                                                                        $   3,000        $   2,900

Accounts Receivable (Net)                                                        28,000          28,800

Inventory                                                                                   64,000          44,000

Plant Assets                                                                               76,000          67,300

Total Assets                                                                           $171,000       $143,000

  

Liabilities and Stockholder’s Equity

Current Liabilities                                                                   $ 45,200          $ 39,750

10% Bonds Payable                                                                   20,000             14,000

   Total Liabilities                                                                    $ 65,200          $ 53,750

Common Stock, $10 Par Value                                              $ 40,000          $ 30,000

Retained Earnings                                                                      65,800             59,250

     Total Stockholder’s Equity                                              $ 105,800         $ 89,250

Total Liabilities and Stockholders’ Equity                           $ 171,000         $143,000

REQUIRED

Using the given data, calculate items 1 through 9 for 1993.

Current ratio

Quick Ratio

Average collection period

Inventory turnover

Operating cash flow to current liabilities ratio

Debt-to-equity ratio

Return on assets

Return on common stockholders’ equity

Return on sales.

Calculate the dividends paid per share of common stock.(Use average number of shares outstanding during the year).What was the dividend pay-out ratio?

If the 1993 year-end price per share of common stock is $25, what is (1) the price-earnings ratio? (2) the dividend yield?

Answer 1