Nineteen Measures of Liquidity, Sol vency, and Profitability The comparative fin

Question

Nineteen Measures of Liquidity, Sol vency, and Profitability The comparative financial statements of Tec Solutions Inc. are as follows. The market price of Tec Solutions Inc. common stock was $89.75 on December 31, 20Y8 TEC SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 20Y8 and 20Y Administrative expenses operating expenses Income from operations Income before income tax $ 455,000 TEC SOLUTIONS INC Comparative Retained Earnings Statement For the Years Ended December 31, 20Y8 and 20Y7 Retained earnings, January 5745000$06.000 stock Retained eamings, December 31 December 31, 20Y8 and 20Y7 Assets 5 175,00 5 200,000 Accounts receivable (net) Total current assets 965,000 Long-term investments Property, plant, and equipment (net) 419,000 s 500,000 Mortgage note payable, 8%, due in 15 years Bonds payable, 10%, due in 20 years Total long-term liabilities Stockholders Equity Preferred S5 stock, $100 par Common stock, $5 par S 100,000 S 100,000 Total stockholders equity Total liabilities and stockholders equity Instructions:

Explanation / Answer

Answer:

1. Working capital 765000 2.Current ratio 965000/200000=4.825 3. Quick ratio 615000/200000=3.075 4. Accounts receivable turnover 1925000/(160000+190000)/2]=11 5. Number of days sales in receivable 365/11=33.18 days 6.Inventory tunover ratio 780000/(260000+300000)/2]=2.8 7.Number of days sales in inventory 365/2.8=130.4 days 8. Ratio of fixed assets to long term liabilities 1535000/1250000=1.2 9. Ratio of liabilities to stockholder equity 1450000/1050000=1.4 10. Number of times interest charges earned 545000/115000=4.7 11. Number of times preferred dividend earned 364000/5000=72.8 12. Ratio of net sales to assets (1925000/2500000)*100=77% 13. Rate earned on total assets (364000/2500000)*100=14.6% 14. Rate earned on stockholder equity (364000/1050000)*100=34.6% 15. rate earned on common stockholder equity (364000/250000)*100=145.6% 16. Earning per share 364000/50000=7.28 17. P/E ratio 89.75/7.28=12.3% 18. Dividend per share of common stock 45000/50000=0.9 19. Dividend Yield 0.9/89.75=1%

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.