ABC Corporation Comparative Income Statements in € For the Years Ended December 31, 20X3 and 20X2 20X3 20X2 Net Sales 4,915,200 4,719,600 Cost of goods (3,133,200) (3,012,600) Gross margin 1,782,000 1,707,000 Operating expenses Selling expenses (715,200) (777,000) General & administrative expenses (670,800) (634,800) Total operating expenses (1,386,000) (1,411,800) Income from operations 396,000 295,200 Interest expense (98,400) (58,800) Net income before taxes 297,600 236,400 Income taxes (93,600) (85,200) Net income after taxes 204,000 151,200 Earnings per share 3.4 2.52 ABC Corporation Comparative Balance Sheets in € December 31, 20X3 and 20X2 Assets 20X3 20X2 Liabilities & Stockholders' Equity 20X3 20X2 Fixed assets: Stockholders' equity: Property, plant and equipment (net) 1,687,500 1,080,000 Common stock 10 par value 600,000 600,000 Total fixed assets 1,125,000 1,080,000 Retained earnings 561,000 461,400 Total stockholders' equity 1,161,000 1,061,400 Current assets: Long - term liabilities: Inventory 862,200 892,200 Bonds payable 600,000 - Accounts Receivable (net) 353,400 343,800 Total long-term liabilities 600,000 - Cash and cash equivalents 121,800 61,200 Current liabilities: Total current assets 1,337,400 1,297,200 Notes payable 300,000 600,000 Accounts payable 401,400 715,800 Total current liabilities 701,400 1,315,800 Total liabilities 1,301,400 1,315,800 Total assets 2,462,400 2,377,200 Total liabilities & stockholders' equity 2,462,400 2,377,200 20X3 20X2 Net Capital Expenditures 60,000 97,500 Dividends Paid 66,000 51,000 Common shares Outstanding 60,000 60,000 Stock Price 27 45 Required: Prepare a long-term solvency analysis by calculating for each year the total liabilites-to-equity ratio and the interest coverage ratio. Prepare a market strength analysis by calculating for each year the P/E ratio and the dividends yield
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ABC Corporation Comparative Income Statements in € For the Years Ended December 31, 20X3 and 20X2 |
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|
20X3 |
20X2 |
|
Net Sales |
4,915,200 |
4,719,600 |
|
Cost of goods |
(3,133,200) |
(3,012,600) |
|
Gross margin |
1,782,000 |
1,707,000 |
|
Operating expenses |
|
|
|
Selling expenses |
(715,200) |
(777,000) |
|
General & administrative expenses |
(670,800) |
(634,800) |
|
Total operating expenses |
(1,386,000) |
(1,411,800) |
|
Income from operations |
396,000 |
295,200 |
|
Interest expense |
(98,400) |
(58,800) |
|
Net income before taxes |
297,600 |
236,400 |
|
Income taxes |
(93,600) |
(85,200) |
|
Net income after taxes |
204,000 |
151,200 |
|
Earnings per share |
3.4 |
2.52 |
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ABC Corporation Comparative Balance Sheets in € December 31, 20X3 and 20X2 |
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Assets |
20X3 |
20X2 |
Liabilities & |
20X3 |
20X2 |
|
Fixed assets: |
|
|
Stockholders' equity: |
|
|
|
Property, plant and equipment (net) |
1,687,500 |
1,080,000 |
Common stock 10 par value |
600,000 |
600,000 |
|
Total fixed assets |
1,125,000 |
1,080,000 |
Retained earnings |
561,000 |
461,400 |
|
|
|
|
Total stockholders' equity |
1,161,000 |
1,061,400 |
|
Current assets: |
|
|
Long - term liabilities: |
|
|
|
Inventory |
862,200 |
892,200 |
Bonds payable |
600,000 |
- |
|
Accounts Receivable (net) |
353,400 |
343,800 |
Total long-term liabilities |
600,000 |
- |
|
Cash and cash equivalents |
121,800 |
61,200 |
Current liabilities: |
|
|
|
Total current assets |
1,337,400 |
1,297,200 |
Notes payable |
300,000 |
600,000 |
|
|
|
|
Accounts payable |
401,400 |
715,800 |
|
|
|
|
Total current liabilities |
701,400 |
1,315,800 |
|
|
|
|
|
|
|
|
|
|
|
Total liabilities |
1,301,400 |
1,315,800 |
|
|
|
|
|
|
|
|
Total assets |
2,462,400 |
2,377,200 |
Total liabilities & stockholders' equity |
2,462,400 |
2,377,200 |
|
|
20X3 |
20X2 |
|
Net Capital Expenditures |
60,000 |
97,500 |
|
Dividends Paid |
66,000 |
51,000 |
|
Common shares Outstanding |
60,000 |
60,000 |
|
Stock Price |
27 |
45 |
Required:
- Prepare a long-term solvency analysis by calculating for each year the total liabilites-to-equity ratio and the interest coverage ratio.
- Prepare a market strength analysis by calculating for each year the P/E ratio and the dividends yield.
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