Guedea Corporation\'s most recent balance sheet and income statement appear belo

Question

Guedea Corporation's most recent balance sheet and income statement appear below: Statement of Financial Position December 31, Year 2 and Year 1 (in thousands of dollars) Year 2 Year 1 Assets Current assets: Cash Accounts receivable Inventory Prepaid expenses $78 $ 188 138 188 58 158 208 48 Total current assets Plant and equipment, net 492 1,060 572 970 Total assets $1,552 $1,542 Liabilities and stockholders' E Current liabilities: quity $ 118 $ 138 90 316 Accounts payable Accrued liabilities Notes payable, short term 90 296 260 Total current liabilities 280 Bonds payable Total liabilities Stockholders' equity 556 596 Preferred stock, $100 par value, 13% Common stock, $2 par value Additional paid-in capital--common stock Retained earnings 200 400 250 146 200 400 250 96 Total stockholders' equity 996 946 Total liabilities and stockholders' equity $1,552 $1,542

Explanation / Answer

S.No. Ratios a Gross margin ratio = Gross margin = 725 = 48.7% Sales 1490 b Earning per share = Net Income for common stock = 95 = 0.48 No. of common stock 200 No. of common stock = Value of Common stock = 400 = 200 Par value 2 Net income for common stock = Net income - prefrence dividend = 121 - (13% X 200) = 95 c Price earning ratio = market price = 100 = 208.33 Earning per share 0.48 Market price of share is not given. It is assumed to be $100 d Dividend payout ratio = Dividend per share = 0.355 = 73.96% Earning per share 0.48 dividend = Net income -Change in retained earnings = 121 - (146-96) = 71 Dividend per share = dividend = 71 = 0.355 No. of common stock 200 e Dividend yeild ratio = Dividend per share = 0.355 = 0.36% Market price 100 Market price of share is not given. It is assumed to be $100 f Return on Total Asset = Net income = 121 = 7.82% Avg.total Asset 1547 Avg. Total Asset = ( Opening Total Asset + Closing Total Asset) = (1542 + 1552) = 1547 2 2 g Return on Equity = Net income = 121 = 12.46% Avg.total Equity 971 Avg. Total Asset = ( Opening Total Equity + Closing Total Equity) = (946+996) = 971 2 2 h Book value per share = Total Share holder's equity -preference stock = 796 = 3.98 No. of common stock 200

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