The following financial statements apply to Robin Company. Calculate the followi

Question

The following financial statements apply to Robin Company.

Calculate the following ratios for 2014 and 2015. When data limitations prohibit computing averages, use year-end balances in your calculations.

      

Return on investment. (Since 2013 numbers are not presented do not use averages when calculating the ratios for 2014. Instead, use the number presented on the 2014 balance sheet. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)

      

Return on equity. (Since 2013 numbers are not presented do not use averages when calculating the ratios for 2014. Instead, use the number presented on the 2014 balance sheet. Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45).)

      

Earnings per share. (Round your answers to 2 decimal places.)

      

Price-earnings ratio (market prices at the end of 2014 and 2015 were $6.03 and $4.81, respectively). (Round intermediate calculations and final answers to 2 decimal places.)

      

Book value per share of common stock. (Round your answers to 2 decimal places.)

      

Times interest earned. (Exclude extraordinary income in the calculation as they cannot be expected to recur and, therefore, will not be available to satisfy future interest payments. Round your answers to 2 decimal places.)

      

      

      

      

Accounts receivable turnover. (Since 2013 numbers are not presented do not use averages when calculating the ratios for 2014. Instead, use the number presented on the 2014 balance sheet. Round your answers to 2 decimal places.)

2015 2014   Revenues        Net sales $ 210,200 $ 176,200        Other revenues 8,000 5,300   Total revenues 218,200 181,500   Expenses        Cost of goods sold 125,000 102,900        Selling expenses 20,600 18,600        General and administrative expenses 10,200 9,200        Interest expense 1,300 1,300        Income tax expense 19,600 16,500   Total expenses 176,700 148,500   Earnings from continuing operations
    before extraordinary items 41,500 33,000   Extraordinary gain (net of $1,300 tax) 3,600 0   Net income $ 45,100 $ 33,000   Assets   Current assets        Cash $ 5,800 $ 6,800        Marketable securities 2,800 2,800        Accounts receivable 35,500 30,800        Inventories 101,400 95,200        Prepaid expenses 4,400 3,400           Total current assets 149,900 139,000   Plant and equipment (net) 105,500 105,500   Intangibles 21,300 0   Total assets $ 276,700 $ 244,500   Liabilities and Stockholders’ Equity   Liabilities        Current liabilities        Accounts payable $ 38,500 $ 55,700        Other 15,100 15,300           Total current liabilities 53,600 71,000        Bonds payable 65,800 66,800        Total liabilities 119,400 137,800   Stockholders’ equity        Common stock (48,000 shares) 114,900 114,900        Retained earnings 42,400 (8,200 )           Total stockholders’ equity 157,300 106,700   Total liabilities and stockholders’ equity $ 276,700 $ 244,500

Explanation / Answer

Answer:

a. Net Margin=(Net profit/Sales)*100

2015=($45,100/$210,200)*100=21.46%

2014=($33,000/$176,200)*100=18.73%

c. Return on equity=Net income/Shareholder's Equity

2015=($45,100/157,300)*100=28.67%

2014=($33000/$106,700)*100=30.93%

d.Earning per share=Net income/Total no of shares

2015=45100/48000 share=0.94 per share

2014=$33000/48000 share=0.6875 per share

e. P/E ratio=MPS/EPS

2015=$4.81/$0.94=5.117

2014=$6.03/0.6875=8.77

f. Book value per share=Net woth assigned to common stock/Common stock shares

2015=114900/48000=2.39 per share

2014=$114900/48000 share=2.39 per share

g.Times interest earned=Income before interest and tax/Interest expense

2015=(41500+19600+1300)/1300=48 times

2014=(33000+16500+1300)/1300=39.08 times

h. Working capital=Current Asset-Current liability

2015=149,900-53,600=96300

2014=139,000-71000=68000

i current ratio=Current asset/Current liability

2015=149,900/53,600=2.80 times

2014=139,000/71000=1.96 times

j. Quick ratio=Quick asset/Current liability

2015=(149,900-101,400-4,400)/53,600=0.822 times

2014=(139,000-95,200-3400)/71000=0.57 times

K. Account receivable turnover ratio=Net credit sales/Accounts receivable

2015=210,200/35,500=5.92 times

2014=176,200/30,800=5.72 times

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