The comparative statements of Painter Tool Company are presented below. PAINTER
ID: 2461649 • Letter: T
Question
The comparative statements of Painter Tool Company are presented below.
PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2017
2016
PAINTER TOOL COMPANY
Balance Sheets
December 31
Assets
2017
2016
Liabilities and Stockholders’ Equity
All sales were on account.
Compute the following ratios for 2017. (Weighted-average common shares in 2017 were 59,300.) (Round Earnings per share, Current ratio and Acid-test ratio to 2 decimal places, e.g. 1.65 or 1.65:1, and all other answers to 1 decimal place, e.g. 6.8 or 6.8%.)
PAINTER TOOL COMPANY
Income Statement
For the Years Ended December 31
2017
2016
Net sales $1,817,800 $1,753,700 Cost of goods sold 1,006,800 972,000 Gross profit 811,000 781,700 Selling and administrative expenses 511,800 476,400 Income from operations 299,200 305,300 Other expenses and losses Interest expense 17,400 13,900 Income before income taxes 281,800 291,400 Income tax expense 81,800 77,900 Net income $ 200,000 $ 213,500Explanation / Answer
a. Earning per share = earnings equity share holders / no. of equity shares
= 278000 / 59300 = 4.69
b. return on common stockholders equity = net income - preference dividend / average stock holders equity * 100
= 200000 / 508450 * 100
= 39.34%
c. Return on assets = net income / total assets *100
= 200000 / 963500 * 100 = 20.76%
d. current ratio = current assets / current liabilities
= 368500 / 203400 = 1.81
e. acid test ratio = Current assets - inventory / current liabilities
= 368500 - 122000 / 203400
= 246500 / 203400 = 1.21
f. accounts receivable turnover = credit sales / average accounts receivables
= 1817800 / 101200 + 117800 /2
= 1817800 / 109500 = 16.6 times
g. inventory turnover ratio = cost of goods sold / average stock
= 1006800 / 114400 + 122000 / 2
= 1006800 / 118200 = 8.52 times
h. times interest earned = EBIT / interest expense
= 299200 / 17400 = 17.2 times
i. Asset turnover = net sales / average total assets
= 1817800 / 851500 + 963500 / 2
= 1817800 / 907500 = 2 times
j. Debt to assets ratio = total liabilities / total assets
= 407700 / 963500 = 42%.
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