Draper Consulting Inc. Balance Sheet December 31, 2013 and 2012 2013 2012 Assets
ID: 2597470 • Letter: D
Question
Draper Consulting Inc.
Balance Sheet
December 31, 2013 and 2012
2013
2012
Assets:
Current Assets:
Cash
514,936
16,350
Accounts Receivable
37,500
1,750
Supplies
2,200
200
Total Current Assets
554,636
18,300
Plant Assets:
Equipment
16,000
1,800
Less: Accumulated Depreciation - Equipment
(440)
(30)
Furniture
5,700
4,200
Less: Accumulated Depreciation - Furniture
(661)
(70)
Building
125,000
0
Less: Accumulated Depreciation - Building
(1,652)
0
Total Assets
698,583
24,200
Liabilities:
Current Liabilities:
Accounts Payable
10,000
4,650
Salary Payable
4,100
685
Unearned Service Revenue
0
700
Total Current Liabilities
14,100
6,035
Long-Term Liabilities:
Interest Payable
10,667
0
Notes Payable
40,000
0
Bonds Payable
400,000
0
Less: Discount on Bonds Payable
(36,184)
0
Total Liabilities
428,583
6,035
Stockholders' Equity:
Common Stock
130,000
18,000
Retained Earnings
140,000
165
Total Stockholders' Equity
270,000
18,165
Total Liabilities and Stockholders' Equity
698,583
24,200
Draper Consulting Inc.
Income Statement
Year Ended December 31, 2012
Revenue:
Service Revenue
3,850
Expenses:
Rent Expense
550
Utilities Expense
250
Salary Expense
685
Depreciation Expense - Equipment
30
Depreciation Expense - Furniture
70
Supplies Expense
700
Total Expenses
2,285
Net Income
1,565
Requirement 2
Based on the financial statements provided and assuming the market price of Draper’s stock is $200 per share and there are 100 shares of common stock outstanding, calculate the following ratios for the year ended December 31, 2012. Round all amounts to TWO places past the decimal point. Show your calculations in the boxes provided.
Current Ratio
Debt Ratio
Debt to Equity Ratio
Earnings per Share
Price to Earnings Ratio
Rate of Return on Total Assets*
Rate of Return on Common Stockholders’ Equity*
*Note: Use the current year amounts instead of averages for calculations.
Draper Consulting Inc.
Balance Sheet
December 31, 2013 and 2012
2013
2012
Assets:
Current Assets:
Cash
514,936
16,350
Accounts Receivable
37,500
1,750
Supplies
2,200
200
Total Current Assets
554,636
18,300
Plant Assets:
Equipment
16,000
1,800
Less: Accumulated Depreciation - Equipment
(440)
(30)
Furniture
5,700
4,200
Less: Accumulated Depreciation - Furniture
(661)
(70)
Building
125,000
0
Less: Accumulated Depreciation - Building
(1,652)
0
Total Assets
698,583
24,200
Liabilities:
Current Liabilities:
Accounts Payable
10,000
4,650
Salary Payable
4,100
685
Unearned Service Revenue
0
700
Total Current Liabilities
14,100
6,035
Long-Term Liabilities:
Interest Payable
10,667
0
Notes Payable
40,000
0
Bonds Payable
400,000
0
Less: Discount on Bonds Payable
(36,184)
0
Total Liabilities
428,583
6,035
Stockholders' Equity:
Common Stock
130,000
18,000
Retained Earnings
140,000
165
Total Stockholders' Equity
270,000
18,165
Total Liabilities and Stockholders' Equity
698,583
24,200
a. Current Ratio Current Assets Current Liabilities Current Ratio b. Debt Ratio Total Liabilities Total Assets c. Debt to Equity Ratio Total Liabilities d. Earnings Per Share Net Income Preferred Dividends) Common Shares Outstanding Earnings Per Share e. P/E Ratio Market Price Per Share Earnings Per Share f. Rate of Return on Total Assets Net IncomeInterest Expense) Average Total Assets Return on Total Assets g. Rate of Return on Common Stockholders' Equity Net Income Preferred Dividends) Average Common Equity Return on EquityExplanation / Answer
A) current ratio: 39 :1
current asset/ current liability
current asset: 554636
current liability: 14100
B) debt ratio : .67:1
total liabilities / total asset
total liabilities: 464767 (428583+36184)
total asset : 698583
C) debt equity ratio : 1.99 : 1
total liability/total equity
total liability :464767
total equity : 233816 (270000-36184)
D) earning per share : 15.65
net income/outstanding shares
net income: 1565
outstanding share : 100
E) P/E ratio : 12.78
market price per share/ EPS
MPS :200
EPS: 15.65
F) return on total asset : .0043
income/ average asset
income : 1565
average asset : 361392 (698583+24200/2)
g
G) return to common equity : .011
return : 1565
average equity : 144083(270000+18165/2)
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