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VITALSTATISTIX, INC. 2017 Balance Sheet Items Assets Liabilities and Owners’ Equity Cash $200 Accounts Payable $200     ...

VITALSTATISTIX, INC.

2017 Balance Sheet Items

Assets Liabilities and Owners’ Equity

Cash $200 Accounts Payable $200     

Accounts Receivable 400 Notes Payable 100

Inventory 650 Long-Term Debt 1,050

Net Plant and Equipment 2,400 Common Stock 500

      Paid-in Surplus 1,500

                                                                  Retained Earnings 300



VITALSTATISTIX, INC.

2017 Income Statement

Sales $2,700

Cost of Goods Sold 800

Depreciation     100

Earnings Before Interest and Taxes $1,800

Interest Paid      150

Taxable Income $1,650

Taxes     550

Net Income $1,100

13. Vitalstatistix, Inc. has 500 shares of common stock outstanding, and the stock

      price at the end of the year was $17.50. Calculate its Market-to-Book Ratio.

(2 points)

14. Calculate the following financial ratios for Vitalstatistix, Inc.

a) Current Ratio (2 points)


b) Total Debt Ratio (3 points)

Total Debt Ratio = (Total Assets – Total Equity) / Total Assets

c) Return on Equity (2 points)















Solutions

Expert Solution

(13)-Market-to-book ratio

Book value per share = Total Stockholders Equity / Number of shares outstanding

= [Common stock + Paid in surplus + Retained earnings] / Number of shares outstanding

= [$500 + $1,500 + $300] / 500 shares outstanding

= $2,300 / 500 shares outstanding

= $4.60 per share

Therefore, the Market-to-book ratio = Market Price per share / Book value per share

= $17.50 per share / $4.60 per share

= 3.80 Times

(14)(a)-Current Ratio

Current Ratio = Total current assets / Total current liabilities

= [cash + Accounts receivables + Inventory] / [Accounts payable + Notes payable]

= [$200 + $400 + $650] / [$200 + $100]

= $1,250 / $300

= 4.17

(14)(b)-Total Debt Ratio

Total Debt Ratio = (Total Assets – Total Equity) / Total Assets

= [$3,650 - $2,300] / $3,650

= $1,350 / $3,650

= 0.37

(14)(c)-Return on Equity

Return on Equity = [Net Income / Total Equity] x 100

= [$1,100 / $2,300] x 100

= 47.83%

jeff jeffy answered 11 months ago
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