Question

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $57 on December 31, 2016.

Blige Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 2016 and 2015
			2016		2015
Retained earnings, January 1			$1,944,750		$1,648,550
Add net income for year			432,000		337,700
Total			$2,376,750		$1,986,250
Deduct dividends
	On preferred stock		$7,000		$7,000
	On common stock		34,500		34,500
		Total	$41,500		$41,500
Retained earnings, December 31			$2,335,250		$1,944,750

Blige Inc.
Comparative Income Statement
For the Years Ended December 31, 2016 and 2015
	2016		2015
Sales	$2,852,430		$2,624,200
Sales returns and allowances	14,190		9,220
Sales	$2,838,240		$2,614,980
Cost of goods sold	1,131,500		1,040,980
Gross profit	$1,706,740		$1,574,000
Selling expenses	$559,000		$693,620
Administrative expenses	476,190		407,370
Total operating expenses	1,035,190		1,100,990
Income from operations	$671,550		$473,010
Other income	35,350		30,190
	$706,900		$503,200
Other expense (interest)	216,000		119,200
Income before income tax	$490,900		$384,000
Income tax expense	58,900		46,300
Net income	$432,000		$337,700

Blige Inc.
Comparative Balance Sheet
December 31, 2016 and 2015
			Dec. 31, 2016		Dec. 31, 2015
Assets
Current assets
	Cash		$643,710		$436,530
	Temporary investments		974,260		723,400
	Accounts receivable (net)		540,200		511,000
	Inventories		408,800		321,200
	Prepaid expenses		121,788		87,310
		Total current assets	$2,688,758		$2,079,440
Long-term investments			511,267		-166,647
Property, plant, and equipment (net)			3,510,000		3,159,000
Total assets			$6,710,025		$5,071,793
Liabilities
Current liabilities			$814,775		$777,043
Long-term liabilities
	Mortgage note payable, 8%, due 2021		$1,210,000		$0
	Bonds payable, 8%, due 2017		1,490,000		1,490,000
		Total long-term liabilities	$2,700,000		$1,490,000
Total liabilities			$3,514,775		$2,267,043
Stockholders' Equity
Preferred $0.7 stock, $40 par			$400,000		$400,000
Common stock, $10 par			460,000		460,000
Retained earnings			2,335,250		1,944,750
	Total stockholders' equity		$3,195,250		$2,804,750
Total liabilities and stockholders' equity			$6,710,025		$5,071,793

Required:

Determine the following measures for 2016, 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. Number of times interest charges are earned
11. Number of times preferred dividends are earned
12. Ratio of sales to assets
13. Rate earned on total assets		%
14. Rate earned on stockholders' equity		%
15. Rate earned on common stockholders' equity		%
16. Earnings per share on common stock	$
17. Price-earnings ratio
18. Dividends per share of common stock	$
19. Dividend yield		%

Answer 1

	formula	calculation	Answer
1. Working capital	current assets - current liabilities	=2688758-814775	1873983
2. Current ratio	current assets / current liabilities	=2688758/814775	3.30
3. Quick ratio	(total current assets - inventory - prepaid expense ) /current liabilities	=(2688758-408800-121788)/814775	2.65
4. Accounts receivable turnover	(Net sales / average accounts receivables)	=(2838240/((540200+511000)/2)	5.4
5. Number of days' sales in receivables	(Average accounts receivable /average daily Net sales	=((540200+511000)/2)/((2838240/365))	67.6
6. Inventory turnover	(Net sales / average inventory)	=(2838240/((408800+321200)/2)	7.8
7. Number of days' sales in inventory	(Average inventory /average daily Net sales	=((408800+321200)/2)/((2838240/365))	46.9
8. Ratio of fixed assets to long-term liabilities	fixed assets / long term liabiltities	=(3510000/2700000)	1.3
9. Ratio of liabilities to stockholders' equity	(total liabilties / total shareholders equity)	=(3514775/3195250)	1.10
10. Number of times interest charges are earned	interest +income before income tax) / interest	(216000+490900)/216000	3.27
11. Number of times preferred dividends are earned	(net income / pref. dividend)	(432000/(400000*0.7)	1.54
12. Ratio of sales to assets	net sales /(Average total assets)	=(2838240)/((6710025+5071793)/2)	0.48
13. Rate earned on total assets	(Net income+interest) /(average of total assets)	=(432000+261000)/(6710025+5071793)/2	2.9%
14. Rate earned on stockholders' equity	Net income /(average total shareholders equity)	=432000/(3195250+2804750)	7.2%
15. Rate earned on common stockholders' equity	(Net income - pref dividend)/(average common shareholders equity)	=(432000-28000)/((3195250-400000)+(2804750-400000))/2	3.9%
16. Earnings per share on common stock	(Net income - pref dividend)/(No of equity shares)	=(432000-28000)/46000	8.783
17. Price-earnings ratio	Market price of share / Earning per share	=57/8.783	6.49
18. Dividends per share of common stock	dividend / no of share	=28000/46000	0.61
19. Dividend yield	Annual dividend per share /price of share	=((400000/40)/46000)/57	0.4%