FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
- For each individual ratio for each company, Your comments for each ratio should include more than just a definition or increase or decrease of the ratio. You should focus on interpreting each ratio numberfor the company and support your comments.
- Use the ratio results by category to form and support conclusion by Liquidity, Solvency and Profitability. Then use to complete the Overall Conclusion as to the financial results of the company (ratios described in the chapters covered and summarized in Chapter 14 of your textbook). Conclude by stating whether the company is the better employment /investment opportunity and why.
Stargel Inc. | ||||||
Comparative |
||||||
December 31, 20Y2 and 20Y1 | ||||||
20Y2 | 20Y1 | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $500,000 | $400,000 | ||||
Marketable securities | 1,010,000 | 1,000,000 | ||||
740,000 | 510,000 | |||||
Inventories | 1,190,000 | 950,000 | ||||
Prepaid expenses | 250,000 | 229,000 | ||||
Total current assets | $3,690,000 | $3,089,000 | ||||
Long-term investments | 2,350,000 | 2,300,000 | ||||
Property, plant, and equipment (net) | 3,740,000 | 3,366,000 | ||||
Total assets | $9,780,000 | $8,755,000 | ||||
Liabilities | ||||||
Current liabilities | $900,000 | $880,000 | ||||
Long-term liabilities: | ||||||
Mortgage note payable, 10% | $200,000 | $0 | ||||
Bonds payable, 10% | 1,500,000 | 1,500,000 | ||||
Total long-term liabilities | $1,700,000 | $1,500,000 | ||||
Total liabilities | $2,600,000 | $2,380,000 | ||||
$500,000 | $500,000 | |||||
Common stock, $5 par | 500,000 | 500,000 | ||||
6,180,000 | 5,375,000 | |||||
Total stockholders' equity | $7,180,000 | $6,375,000 | ||||
Total liabilities and stockholders' equity | $9,780,000 | $8,755,000 |
Required:
Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.
1. |
$2,790,000 | |
2. |
4.1 | |
3. Quick ratio | 2.5 | |
4. Accounts receivable turnover | 16 | |
5. Number of days' sales in receivables | 22.8 | days |
6. Inventory turnover | 5 | |
7. Number of days' sales in inventory | 73 | days |
8. Ratio of fixed assets to long-term liabilities | 2.2 | |
9. Ratio of liabilities to stockholders' equity | 0.4 | |
10. Times interest earned | 7.6 | |
11. Asset turnover | 1.1 | |
12. Return on total assets | 11.50 | % |
13. Return on stockholders’ equity | 13.30 | % |
14. Return on common stockholders’ equity | 13.60 | % |
15. Earnings per share on common stock | $8.55 | |
16. Price-earnings ratio | 14 | |
17. Dividends per share of common stock | $0.50 | |
18. Dividend yield | 0.40 | % |
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