The comparative statements of Painter Tool Company are presented below. PAINTER
ID: 2489564 • 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 56,300.) (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 $1,812,100 $1,745,000 Cost of goods sold 1,008,300 986,000 Gross profit 803,800 759,000 Selling and administrative expenses 511,000 475,400 Income from operations 292,800 283,600 Other expenses and losses Interest expense 17,300 13,500 Income before income taxes 275,500 270,100 Income tax expense 80,400 77,600 Net income $ 195,100 $ 192,500Explanation / Answer
Solution.
Calculation of ratio for the year 2017.
A. Earnings per share.
EPS = net income / average outstanding common shares
EPS = $195,100 / 56,300 = $3.46.
B. Return on common stockholders’ equity.
EPS = (net income – dividends on preferred stock) / average outstanding common shares
EPS = (( $195,100 - 0 ) / $512,450 )) x 100
= 38%
C. Return on assets.
Formula = Net Income / Avg. Total asset
= $195,100 / $908,400
= 21.47%
D. Current ratio.
Formula = Current asset / Current libilities.
= 368,400 / 203,600
= 1.80
E. Acid-test ratio.
Formula = (Current asset - Inventory)
= ( 368,400 - 122,900 ) / 203,600
= 1.20
F. Accounts receivable turnover.
Formula = Net Annual Credit Sales / (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
= $1,812,100 / ( 116,500 + 101,200 ) / 2
= $1,812,100 / 108,850
= 16.64.
G.Inventory turnover.
Formula = Cost of goods sold / Average inventory.
= 1,008,300 / $118,500
= 8.50 T
H. Times interest earned.
Formula = EBIT / Interest Expense.
= $292,800 / $17,300
= 16.92.
I. Asset turnover.
Formula = Net sales / Average total asset.
= $1,812,100 / $908,400
= 1.99.
J. Debt to assets ratio.
Formula = Total liabilities / Total assets
= $404,000 / $969,700
= 41.66%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.