The financial statements of ABC Co. appear below:
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ABC Co. Comparative Balance Sheet December 31, 2014 |
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ASSETS |
2014 |
2013 |
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Cash |
$25,000 |
$40,000 |
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Marketable Securities |
20,000 |
60,000 |
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Accounts Receivable (net) |
40,000 |
30,000 |
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Inventory |
150,000 |
170,000 |
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Property, Plant and Equipment (net) |
170,000 |
200,000 |
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Total assets |
$405,000 |
$500,000 |
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Liabilities and Stockholders’ equity |
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Accounts Payable |
$25,000 |
$30,000 |
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Short Term Notes Payable |
40,000 |
90,000 |
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Bonds Payable |
75,000 |
160,000 |
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Common Stock |
175,000 |
145,000 |
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Retained Earnings |
90,000 |
75,000 |
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Total Liabilities and Stockholders’ Equity |
$405,000 |
$500,000 |
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ABC Co. Income Statement For the Year Ended December 31, 2014 |
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Net Sales |
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$360,000 |
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Cost of Goods Sold |
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184,000 |
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Gross Profit |
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176,000 |
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Expenses |
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Interest Expense |
21,000 |
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Selling Expense |
30,000 |
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Administrative Expense |
20,000 |
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Total Expenses |
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71,000 |
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Income before income taxes |
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105,000 |
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Income tax expense |
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30,000 |
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Net income |
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$75,000 |
Additional information:
a. Cash dividends of $50,000 were declared and paid in 2014.
b. Weighted average number of shares of common stock outstanding during 2014 was 62,000 shares
c. Market value of common stock on December 31, 2014 was $15 per share.
d. Net cash provided by operating activities for 2014 was $65,000
Instructions:
Using the financial statements and additional information, compute the following ratios for ABC Co. for 2014. Show all computations.
1. Current ratio
2. Return on common stockholders equity
3. Price earnings ratio
4. Inventory turnover ratio
5. Receivables turnover
6. Times interest earned
7. Profit margin ratio
8. Average days in inventory
9. Payout ratio
10. Return on assets
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