Survey Of Accounting
5th Edition
ISBN: 9781259631122
Author: Edmonds, Thomas P.
Publisher: Mcgraw-hill Education,
expand_more
expand_more
format_list_bulleted
Videos
Question
Chapter 9, Problem 22P
a.
To determine
Determine the number of times interest was earned for Company O for 2018 and 2017.
b.
To determine
Compute the earnings per share based on the average number of shares outstanding.
c.
To determine
Determine the price earnings ratio for Company O for 2018 and 2017.
d.
To determine
Determine the return on average equity.
e.
To determine
Determine the net margin.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Comparative financial statement data of Garfield, Inc. follow:
Market price of Garfield’s common stock: $69.36 at December 31, 2018, and $38.04 at December 31, 2017.
Common shares outstanding: 14,000 on December 31, 2018 and 12,000 on December 31, 2017 and 2016.
All sales are on credit.
Compute the following ratios for 2018 and 2017:
2018
2017
a. Current ratio
b. Cash ratio
c. Times-interest-earned ratio
d. Inventory turnover
e. Gross profit percentage
f. Debt to equity ratio
g. Rate of return on common stockholders’ equity
h. Earnings per share of common stock
i. Price/earnings ratio
Decide (a) whether Garfield’s ability to pay debts and to sell inventory improved or deteriorated during 2018 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.
Profitability ratios
The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5:
December 31
20Y7
December 31
20Y6
December 31
20Y5
Total assets
$307,000
$277,000
$247,000
Notes payable (8% interest)
100,000
100,000
100,000
Common stock
40,000
40,000
40,000
Preferred 6% stock, $100 par
(no change during year)
Retained earnings
20,000
109,920
20,000
80,240
20,000
60,000
The 20Y7 net income was $30,880, and the 2016 net income was $21,440. No dividends on common stock were declared between 2015 and 2017. Preferred dividends were declared and paid in full in 2016 and 2017.
a. Determine the return on total assets, the return on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round your answers to one decimal place.
20Y7
20Y6
Return on total assets
Return on stockholders' equity
Return on common stockholders' equity
%
%
%
%
%
%
b. The profitability ratios indicate…
Problem 13-2A (Algo) Ratios, common-size statements, and trend percents LO P1, P2, P3
(The following information applies to the questions displayed below.]
Selected comparative financial statements of Korbin Company follow.
KORBIN COMPANY
Comparative Income Statements
For Years Ended December 31
2021
2020
2019
$ 442,035
266,105
175,930
62,769
39,783
$ 338,635
212,324
126,311
46,732
29,800
76,532
49,779
10, 205
Sales
$ 235,000
Cost of goods sold
Gross profit
Selling expenses
Administrative expenses
Total expenses
Income before taxes
150,400
84,600
31,020
19,505
50,525
34,075
102,552
73,378
13,648
Income tax expense
6,917
Net income
$ 59,730
$ 39,574
$ 27,158
KORBIN COMPANY
Comparative Balance Sheets
December 31
2021
2020
2019
Assets
$ 55,578
$ 37,199
$ 49,726
4,570
56,095
Current assets
Long-term investments
Plant assets, net
900
104,820
95,143
Total assets
$ 160,398
$ 133,242
$ 110,391
Liabilities and Equity
$ 19,318
$ 23,418
68,000
8,500
60, 480
Current liabilities
$ 19,853
Common…
Chapter 9 Solutions
Survey Of Accounting
Ch. 9 - 1. Why are ratios and trends used in financial...Ch. 9 - Prob. 2QCh. 9 - Prob. 3QCh. 9 - 4. What is the significance of inventory turnover,...Ch. 9 - 5. What is the difference between the current...Ch. 9 - Prob. 6QCh. 9 - Prob. 7QCh. 9 - Prob. 8QCh. 9 - 9. What are some limitations of the earnings per...Ch. 9 - Prob. 10Q
Ch. 9 - Prob. 11QCh. 9 - Prob. 12QCh. 9 - Prob. 13QCh. 9 - Prob. 14QCh. 9 - Exercise 9-1 Horizontal analysis Winthrop...Ch. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Comprehensive analysis The December 31, 2019,...Ch. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Ratio analysis Compute the specified ratios using...Ch. 9 - Prob. 14ECh. 9 - LO 13-2, 13-3, 13-4, 13-5 Exercise 13-15A...Ch. 9 - Prob. 16PCh. 9 - Prob. 17PCh. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Problem 9-21 Ratio analysis Selected data for...Ch. 9 - Prob. 22PCh. 9 - Problem 9-23 Ratio analysis The following...Ch. 9 - Prob. 24PCh. 9 - Prob. 1ATCCh. 9 - Prob. 3ATCCh. 9 - ATC 9-5 Ethical Dilemma Making the ratios look...
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Measures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2 (round to one decimal place, including percentages, except for per-share amounts): 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardRATIO ANALYSIS OF COMPARATIVE FINANCIAL STATEMENTS Refer to the financial statements in Problem 24-8B. REQUIRED Calculate the following ratios and amounts for 20-1 and 20-2 (round all calculations to two decimal places). (a) Return on assets (Total assets on January 1, 20-1, were 111,325.) (b) Return on common stockholders equity (Total common stockholders equity on January 1,20-1, was 82,008.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 6,300 shares in 20-1 and 6,900 in 20-2.) (d) Book value per share of common stock (e) Quick ratio (f) Current ratio (g) Working capital (h) Receivables turnover (Net receivables on January 1, 20-1, were 28,995.) (i) Merchandise inventory turnover (Merchandise inventory on January 1, 20-1, was 32,425.) (j) Debt-to-equity ratio (k) Asset turnover (Assets on January 1,20-1, were 111,325.) (l) Times interest earned ratio (m) Profit margin ratio (n) Assets-to-equity ratio (o) Price-earnings ratio (The market price of the common stock was 120.00 and 110.00 on December 31, 20-2 and 20-1, respectively.)arrow_forwardRATIO ANALYSIS OF COMPARATIVE FINANCIAL STATEMENTS Refer to the financial statements in Problem 24-8A. REQUIRED Calculate the following ratios and amounts for 20-1 and 20-2 (round all calculations to two decimal places): (a) Return on assets (Total assets on January 1, 20-1, were 175,750.) (b) Return on common stockholders equity (Total common stockholders equity on January 1, 20-1, was 106,944.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.) (d) Book value per share of common stock (e) Quick ratio (f) Current ratio (g) Working capital (h) Receivables turnover (Net receivables on January 1, 20-1, were 39,800.) (i) Merchandise inventory turnover (Merchandise inventory on January 1,20-1, was 48,970.) (j) Debt-to-equity ratio (k) Asset turnover (Assets on January 1, 20-1, were 175,750.) (l) Times interest earned ratio (m) Profit margin ratio (n) Assets-to-equity ratio (o) Price-earnings ratio (The market price of the common stock was 100.00 and 85.00 on December 31, 20-2 and 20-1, respectively.)arrow_forward
- Earnings per share Financial statement data for the years 20Y5 and 20Y6 for Black Bull Inc. follow: a. Determine the earnings per share for 20Y5 and 20Y6. b. Is the change in the earnings per share from 20Y5 to 20Y6 favorable or unfavorable?arrow_forwardMeasures of liquidity, solvency, and profitability The comparative financial statements of Marshall Inc. are as follows. The market price of Marshall common stock was 82.60 on December 31, 20Y2. Instructions Determine the following measures for 20Y2, rounding to one decimal place, including percentages, except for per-share amounts: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days sales in receivables 6. Inventory turnover 7. Number of days sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders equity 10. Times interest earned 11. Asset turnover 12. Return on total assets 13. Return on stockholders equity 14. Return on common stockholders equity 15. Earnings per share on common stock 16. Price-earnings ratio 17. Dividends per share of common stock 18. Dividend yieldarrow_forwardRatio Analysis Consider the following information taken from the stockholders equity section: How do you interpret the companys payout and profitability performance? Required: 1. Calculate the following for 2020. (Note. Round answers to two decimal places.) 2. CONCEPTUAL CONNECTION Assume 2019 ratios were: and the current year industry averages are: How do you interpret the companys payout and profitability performance?arrow_forward
- Financial leverage Costco Wholesale Corporation (COST) and Wel-Mart Stroes Inc. (WMT)reported the following data (in milllions) for a recent year: Compute the return on stockholders equity. Round to one decimal place.arrow_forwardRATIO ANALY SIS OF COMPARATI VE FIN ANCIAL STATE MENT S Refer to the financial statements in Problem 24-8A. REQUIRED Calculate the following ratios and amounts for 20-1 and 20-2 (round all calculations to two decimal places): (a) Return on assets (Total assets on January 1, 20-1, were 175,750.) (b) Return on common stockholders equity (Total common stockholders equity on January 1, 20-1, was 106,944.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.) (d) Book value per share of common stock (e) Quick ratio (f) Current ratio (g) Working capital (h) Receivables turnover and average collection period (Net receivables on January 1, 20-1, were 39,800.) (i) Merchandise inventory turnover and average number of days to sell inventory (Merchandise inventory on January 1, 20-1, was 48,970.) (j) Debt-to-equity ratio (k) Asset turnover (Assets on January 1, 20-1, were 175,750.) (l) Times interest earned ratio (m) Profit margin ratio (n) Assets-to-equity ratio (o) Price-earnings ratio (The market price of the common stock was 100.00 and 85.00 on December 31, 20-2 and 20-1, respectively.)arrow_forwardProfitability Ratios The following selected data were taken from the financial statements of Vidahill Inc. for December 31, 2017, 20Y6, and 20Y5: December 31 20Y7 20Y6 20Y5 Total assets $163,000 $147,000 $131,000 Notes payable (8% interest) 50,000 50,000 50,000 Common stock 20,000 20,000 20,000 Preferred 5% stock, $100 par 10,000 10,000 10,000 (no change during year) Retained earnings 59,090 39,790 30,000 The 2017 net income was $19,800, and the 2016 net income was $10,290. No dividends on common stock were declared between 2015 and 20Y7. Preferred dividends were declared and paid in full in 2016 and 2017. a. Determine the return on total assets, the rate earned on stockholders' equity, and the return on common stockholders' equity for the years 2016 and 2017. When required, round to one decimal place. 20Y7 20Y6 Return on total assets Return on stockholders' equity Return on common stockholders' equity % % % % % % b. The profitability ratios indicate that Vidahill Inc.'s profitability…arrow_forward
- PROBLEM II Financial Ratios (Adapted from MAS Reviewer by Aliohn Lee) Lyn merchandising has 1,000,000 common shares with each share priced at P8. In 2017, the company declared dividends of PO.10 per share. The balance sheet at the end of 2017 showed approximately the same amounts as that at the end of 2016. The financial statements of Lyn Merchandising are as follows: Lyn Merchandising, Income Statement for 2017 (In thousands) Sales P4,700 Cost of Goods Sold (2,300) Gross Profit P2,400 Operating Expenses: Depreciation P320 Others 23 (1,550) ЕBIT P850 Interest Expense (150) Earnings before tax P700 Income Tax (280) NET INCOME P420 Lyn Merchandising, Balance Sheet at December 31, 2017 (In Thousands) ASSETS LIABILITIES and SHE Cash Accounts Payable Accrued expenses Total Current Liab. P220 P190 Accounts Rec. 440 180 Inventory Total Current Ass. P1,070 410 P370 Long-term debt Common stocks 1,960 PPE 5,600 1,810 Accum. Dep. (2,100) Retained earnings 430 Total Assets P4,570 Total Liab and…arrow_forwardUsing ratios to evaluate a stock investment Comparative financial statement data of Garfield Inc. follow: Market price of Garfield’s common stock:$69.36 at December 31 2018 and $38.04 at December 31, 2017. Common shares outstanding 14, 000 on December 31, 2018 and 12,000 on December 31 2017 and 2016. All sales are on credit. Requirements Compute the following ratios tor 2018 and 2017: a. current ratio b. Cash ratio c. Times-interest-earned ratio d. Inventory turnover e. Gross profit percentage f. Debt to equity ratio g. Rate of return on common stockholder’s equity h. Earnings per share of common stock i. Price/earnings ratio 2. Decide (a) whether Garfield’s ability to pat debts and to sell inventory improved or deteriorated during 2018 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased.arrow_forwardProblem 17-2A Ratios, common-size statements, and trend percents LO P1, P2, P3 [The following information applies to the questions displayed below.] Selected comparative financial statements of Korbin Company follow: KORBIN COMPANY Comparative Income Statements For Years Ended December 31, 2017, 2016, and 2015 2017 2016 2015 $ 396,891 238,928 157,963 56,359 $ 304,051 191,248 112,803 41,959 26,756 $ 211,000 135,040 75,960 27,852 Sales Cost of goods sold Gross profit Selling expenses Administrative expenses 35,720 92,079 65,884 12,254 17,513 45,365 30,595 Total expenses 68,715 44,088 9,038 Income before taxes Income taxes 6,211 Net income $ 53,630 $ 35,050 $ 24,384 KORBIΝ COMPΑNY Comparative Balance Sheets December 31, 2017, 2016, and 2015 2017 2016 2015 Assets $ 49,213 $ 38,503 1,200 95,481 Current assets $ 51,470 Long-term investments 4,100 90,003 $ 139,216 56,430 $ 112,000 Plant assets, net Total assets $ 135,184 Liabilities and Equity $ 20,326 67,000 8,375 43,515 20,142 67,000 8,375…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
College Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
College Accounting, Chapters 1-27 (New in Account...AccountingISBN:9781305666160Author:James A. Heintz, Robert W. ParryPublisher:Cengage Learning
Financial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
College Accounting, Chapters 1-27
Accounting
ISBN:9781337794756
Author:HEINTZ, James A.
Publisher:Cengage Learning,
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
College Accounting, Chapters 1-27 (New in Account...
Accounting
ISBN:9781305666160
Author:James A. Heintz, Robert W. Parry
Publisher:Cengage Learning
Financial Accounting
Accounting
ISBN:9781337272124
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Cengage Learning
Financial Accounting: The Impact on Decision Make...
Accounting
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Financial ratio analysis; Author: The Finance Storyteller;https://www.youtube.com/watch?v=MTq7HuvoGck;License: Standard Youtube License