Chapter_13_P13-2A

(A) Earnings Per Share Net Income ÷ Shares Outstanding $300,000/ $5= $60,000 $290,000/ $5= $58,000 ($60,000 + $58,000) / 2=$59,000 $218,000/ $59,000= $3.69

$3.69

(B) Return on Common Stockholders' Equity 40.80% Return Common Stockholders' Equity Ratio = Net Income - Preferred Stock Dividends Average Common Stockholders' Equity $218,000/ [($465,400+$603,400)]/ 2= $218,000/ $534,400= 40.80%

(C) Return on Assets Net Imcome x Net Sales Net Sales Average Total Assets $218,000/ [($1,026,900+ $852,800)]/ 2= 23.2

23.20% Net Income Average Total Assets

(D) Current Ratio Current Ratio = Current Assets ÷ Current Liabilities $377,900/ $203,500= 1.86

1.86

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(E) Receivables Turnover 17.1 Receivables Turnover Ratio = Net Credit Sales ÷ Average Net Receiable $1,890,540/[($102,800+$117,800)/2]= $1,890,540/$110,300= 17

(F) Average Collection Period Average Collection Period = 365 ÷ Receivables Turnover Ratio 365 days/ 17.1= 21.3 days

21.3

(G) Inventory Turnover 8.8 Inventory Turnover Ratio = Cost of Goods Sold ÷ Average Inventory $1,058,540/[($115,500+$126,000)]/2= $1,058,540/$120,750= 8.8 times

(H) Days in Inventory Days in Inventory = 365 ÷ Inventory Turnover Ratio 365 days/ 8.8= 41.5 days

41.5

(I) Times Interest Earned Net Income + Interest Expense + Tax Expense $332,000/ $22,000= 15.1 times

15.1 ÷

Interest Expense

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(J) Asset Turnover Ratio 2.01 Asset Turnover Ratio = Net Sales ÷ Average Total Assets $1,890,540/[($1,026,900+$852,800)]/2= $1,890,540/ $939,850 =2.01

(K) Debt to Total Assets Debt to Total Assets = Total Liabilities ÷ Total Assets

41%

$423,500/ $1,026,900= 41%

(L) Current Cash Debt Coverage Ratio 0.54 Current Cash Debt Coverage Ratio = Cash Provided by Operations ÷ Average Current Liabilities

$220,000/[($387,400+$423,500)]/ 2=