FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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- Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Current Year Prior Year Accounts payable $518,000 $250,000 Current maturities of serial bonds payable 460,000 460,000 Serial bonds payable, 10% 2,070,000 2,530,000 Common stock, $1 par value 70,000 100,000 Paid-in capital in excess of par 840,000 840,000 Retained earnings 2,900,000 2,300,000 The income before income tax expense was $986,700 and $863,400 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year fill in the blank 1 Prior year fill in the blank 2 b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year fill in the blank 3 Prior year fill in the blank 4arrow_forwardSelected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $5,300,000 Long-term debt (9% interest rate) $ 730, 000 Total stockholders' equity $ 2,500,000 Interest paid on long-term debt $ 65,700 Net income $ 400,000 Total assets at the beginning of the year were $5, 100,000; total stockholders' equity was $2,300,000. The company's tax rate is 40%. Required: 1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i. e., 0.1234 should be entered as 12.3).) 3. Is financial leverage positive or negative?arrow_forwardLos Altos, Inc., disclosed the following information in a recent annual report: Year 1 Year 2 Net income $35,000 $55,000 Preferred stock dividends 3,000 3,000 Average common stockholders' equity 1,200,000 1,500,000 Dividend per common share 1.20 1.20 Earnings per share 1.90 2.05 Market price per common share, year-end 19.50 21.00 Calculate the common stock dividend yield for Los Altos, Inc. for both years. Round to one decimal. Year 1 Year 2 Common stock dividend yield 6.15 % X 5.71 % X Did the dividend yield improve from Year 1 to Year 2? No +arrow_forward
- Prag Co. reported the following financial data for its most current year: Beginning-of-year common stock $80,000 Beginning-of-year retained earnings 175,400 Net income 32,250 Dividends paid 8,500 Issuance of common stock 15,000 Compute Prag's end-of-year total stockholders' equity.arrow_forwardLos Altos, Inc., disclosed the following information in a recent annual report: Year 1 Year 2 Net income $35,000 $55,000 Preferred stock dividends 3,000 3,000 Average common stockholders' equity 1,200,000 1,500,000 Dividend per common share 1.20 1.20 Earnings per share 1.90 2.05 Market price per common share, year-end 19.50 21.00 Calculate the dividend payout for Los Altos, Inc. for both years. Round to one decimal. Year 1 Year 2 Common stock dividend payout 6.15 % X 5.71 % X Did the dividend payout increase from Year 1 to Year 2? No +arrow_forwardRatio the liabilities to stockholders equity and times interest earned. following data were taken from the financial statement of Hunter Inc.for December 31st of two recent years: Current year accounts payable $434,000. Current maturity. 290,000 Serial bonds payable, 10% 1,190,000 Common stock,$1 par value 70,000 Paid- in capital in excess of par 700,000 Retained earnings 2,420,000 Previous year $127,000 290,000 1,480,000 90,000 700,000 1,920,000 The income before income tax expense was $518,000 and $453,000 for the camera in previous years respectively. A. Determine the ratio of liabilities to stockholders Equity at the end of each year. Round to one decimal place. Current year Previous year B. Determine the times interest earned ratio for both years. Round to one decimal place. Current year Previous year C. The ratio of liabilities to stockholders Equity has _______and the number of times bond interest charges were earned has_______ from…arrow_forward
- Jay Co. reported the following financial data for its most current year: Beginning-of-year common stock $105,000 Beginning-of-year retained earning 175,400 Net Income 33,400 Dividends Paid 10,500 Issuance of common stock 24,000 Compute Jay’s end-of-year total stockholders’ equity.Total Stockholders' Equity= $?arrow_forwardMarkus Company’s common stock sold for $1.75 per share at the end of this year. The company paid a common stock dividend of $0.42 per share this year. It also provided the following data excerpts from this year’s financial statements: Ending Balance Beginning Balance Cash $ 27,000 $ 43,800 Accounts receivable $ 48,000 $ 41,300 Inventory $ 45,100 $ 48,000 Current assets $ 120,100 $ 133,100 Total assets $ 312,000 $ 263,800 Current liabilities $ 49,500 $ 34,500 Total liabilities $ 82,000 $ 73,800 Common stock, $1 par value $ 105,000 $ 105,000 Total stockholders’ equity $ 230,000 $ 190,000 Total liabilities and stockholders’ equity $ 312,000 $ 263,800 This Year Sales (all on account) $ 580,000 Cost of goods sold $ 336,400 Gross margin $ 243,600 Net operating income $ 49,500 Interest expense $ 3,000 Net income $ 32,550 4. What is the return on total assets (assuming a 30% tax rate)?arrow_forwardMarkus Company’s common stock sold for $5.25 per share at the end of this year. The company paid a common stock dividend of $0.63 per share this year. It also provided the following data excerpts from this year’s financial statements: EndingBalance BeginningBalance Cash $ 49,000 $ 44,200 Accounts receivable $ 92,000 $ 68,700 Inventory $ 76,300 $ 92,000 Current assets $ 217,300 $ 204,900 Total assets $ 801,000 $ 875,400 Current liabilities $ 85,500 $ 90,000 Total liabilities $ 206,000 $ 185,400 Common stock, $1 par value $ 165,000 $ 165,000 Total stockholders’ equity $ 595,000 $ 690,000 Total liabilities and stockholders’ equity $ 801,000 $ 875,400 This Year Sales (all on account) $ 1,095,000 Cost of goods sold $ 635,100 Gross margin $ 459,900 Net operating income $ 313,875 Interest expense $ 15,500 Net income $ 208,862 7. What is the amount of working capital and the current ratio at the end of this year?arrow_forward
- The following information was taken from the financial statements of Tolbert Inc. for December 31 of the current fiscal year: Common stock, $20 par (no change during the year) $10,000,000 Preferred $4 stock, $40 par (no change during the year) 2,500,000 The net income was $1,750,000 and the declared dividends on the common stock were $1,125,000 for the current year. The market price of the common stock is $45 per share. For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. Round to one decimal place, except for dollar amounts which should be rounded to two decimal places. a. Earnings per Share $fill in the blank 1 b. Price-Earnings Ratio fill in the blank 2 c. Dividends per Share $fill in the blank 3 d. Dividend Yield fill in the blank 4 %arrow_forwardFind for Armstrong Company and Blair Company : Liquidity Ratio (a) Current Ratio Market tests (b) Price/earnings ratio (c) Divident yield ratio (%)arrow_forwardThe following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Current Year Previous Year Accounts payable $145,000 $226,000 Current maturities of serial bonds payable 310,000 310,000 Serial bonds payable, 10% 1,590,000 1,900,000 Common stock, $1 par value 80,000 110,000 Paid-in capital in excess of par 900,000 900,000 Retained earnings 3,110,000 2,470,000 The income before income tax was $456,000 and $399,000 for the current and previous years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current Year: _________ Previous Year: ________ b. Determine the times interest earned ratio for both years. Round to one decimal place. Current Year: _________ Previous Year: ________ c. The ratio of liabilities to stockholders' equity has ______ (improved/deteriorated) and the times interest earned ratio has _______…arrow_forward
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