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

12. Ratio of Net Sales to Assets = 0.77 13. Rate Earned on total assets = 0.15 or 15% 16.Earning per share on common stock = $7.18 12. Ratio of Net Sales to Assets = Net Sales / Total Assets Net Sales = $ 1,925,000 Assets = $ 2,500,000 Ratio of Net Sales to Assets = $1,925,000/$2,500,000 = 0.77 13. Rate Earned on total assets = Net Income / Total Assets Net Income = $364,000 Total Assets = $2,500,000 Rate Earned on total assets = $364,000/$2,500,000 = 0.15 or 15% 16.Earning per share on common stock = Net Income / No. of shares of Common stock Net Income (after deducting Preference share holders dividends) = $364,000 - $5,000 = $359,000 No of Shares = $250,000/$5 = 50,000 Earning per share on common stock = $359,000/50,000 = $7.18

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