Nineteen Measures of Solvency and Profitability The comparative financial statem

Question

Nineteen Measures of Solvency and Profitability

The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $62 on December 31, 2016.

Required:

Determine the following measures for 2016, rounding to one decimal place, except for 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.

Blige Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015     2016     2015 Retained earnings, January 1 $2,489,825 $2,103,075 Add net income for year 524,400 430,800 Total $3,014,225 $2,533,875 Deduct dividends On preferred stock $7,000 $7,000 On common stock 37,050 37,050 Total $44,050 $44,050 Retained earnings, December 31 $2,970,175 $2,489,825

Explanation / Answer

NO Formulla                                                                2,016 2015 5 Average accounts receivable / Average daily sales=Number of days' sales in receivables (678900/(3,697,600/365) = 67.02 Days (635100/(3,401,800/365) =68.14 Days 6 Inventory turnove=Cost of goods sold /average inventory 1267280/511,000=2.48 1165900/394,200=2.96 7 Number of days' sales in inventory= average inventory / average daily cost of goods sold 511000/(1267280/365)= 147.18 Days 394200/(1165900/365)=123.41Days 8 Ratio of fixed assets to long-term liabilities=fixed assets / long-term liabilities 3740000/3,400,000=1.10 3366000/1,870,000=1.80 10 Number of times interest charges are earned = EBIT/Interest 867900/272,000=3.19 639600/149,600=4.28 12 Ratio of sales to assets= sales / average total assets. 3697600/8,484,368=0.44 3401800/5,487,562=0.62 13 Rate earned on total assets= EAT/Total Asset 524,400/8,484,368*100= 6% 430800/5,487,562*100= 8% 14 Rate earned on stockholders' equity= net income / average stockholders' equity 524,400/(4040175-500000) =14.81% 430800/(3,559,825-500000)=14.08% 15 Rate earned on common stockholders' equity= net income - preferred dividend / average common stockholders' equity (524,400-35000)/(4040175-500000) =13.82% (430,800-35000)/(3,559,825-500000)= 12.94% 16 Earnings per share on common stock= net income - preferred dividend /number of common shares outstanding (524,400-35000)/57000 = 8.59 (430,800-35000)/57000=6.94 17 Price-earnings ratio=market price per share/annual earnings per share 62/8.59=7.22 Market price of 2015 is not given 18 Dividends per share of common stock=Dividend Distributed/number of common shares outstanding 37,050/57000=0.65 37,050/57000=0.65 19 Dividend yield=annual dividends paid per share of common stock/ market price per share at a specific date 0.65/62=1.048% Market price of 2015 is not given

Related Questions

Navigate

• Browse (All)
• Browse N
• Subjects

---

---

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