P18-2A The comparative statements of Villa Tool Company are presented below. VIL
ID: 2347614 • Letter: P
Question
P18-2AThe comparative statements of Villa Tool Company are presented below.
VILLA TOOL COMPANY
Income Statement
For the Year Ended December 31
2013 2012
Net sales $1,818,500 $1,750,500
Cost of goods sold
1,011,500
996,000
Gross profit 807,000 754,500
Selling and administrative expense
516,000
479,000
Income from operations 291,000 275,500
Other expenses and losses
Interest expense
18,000
14,000
Income before income taxes 273,000 261,500
Income tax expense
81,000
77,000
Net income
$ 192,000
$ 184,500
VILLA TOOL COMPANY
Balance Sheets
December 31
Assets 2013 2012
Current assets
Cash $ 60,100 $ 64,200
Short-term investments 69,000 50,000
Accounts receivable (net) 117,800 102,800
Inventory
123,000
115,500
Total current assets
369,900
332,500
Plant assets (net)
600,300
520,300
Total assets
$970,200
$852,800
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable $160,000 $145,400
Income taxes payable
43,500
42,000
Total current liabilities
203,500
187,400
Bonds payable
200,000
200,000
Total liabilities
403,500
387,400
Stockholders' equity
Common stock ($5 par) 280,000 300,000
Retained earnings
286,700
165,400
Total stockholders' equity
566,700
465,400
Total liabilities and stockholders' equity
$970,200
$852,800
All sales were on account. The allowance for doubtful accounts was $3,200 on December 31, 2013, and $3,000 on December 31, 2012.
Instructions
Compute the following ratios for 2013. (Weighted average common shares in 2013 were 57,000.) (a) Earnings per share. (b) Return on common stockholders' equity. (c) Return on assets. (d) Current. (e) Acid-test. (f) Receivables turnover. (g) Inventory turnover. (h) Times interest earned. (i) Asset turnover. (j) Debt to total assets. (Round earnings per share, current ratio and acid-test ratio to 2 decimal places, e.g. 10.50. Round other answers to 1 decimal place, e.g. 10.5.)
(a) Earnings per share $
(b) Return on common stockholders; equity %
(c) Return on assets %
(d) Current :1
(e) Acid-test :1
(f) Receivables turnover times
(g) Inventory turnover times
(h) Times interest earned times
(i) Asset turnover times
(j) Debt to total assets %
Explanation / Answer
Return on equity solution?
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