Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 7% $900,000 Preferred $5 stock, $50 par $89,000 Common stock, $12 par $72,624.00 Income before income tax was $189,000, and income taxes were $28,800 for the current year. Cash dividends paid on common stock during the current year totaled $34,073. The common stock was selling for $225 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest earned ratio 4 x times b. Earnings per share on common stock 25 V c. Price-earnings ratio d. Dividends per share of common stock 5.6 X e. Dividend yield 22 x % %24

Five Measures of Solvency or Profitability The balance sheet for Garcon Inc. at the end of the current fiscal year indicated the following: Bonds payable, 7% $900,000 Preferred $5 stock, $50 par $89,000 Common stock, $12 par $72,624.00 Income before income tax was $189,000, and income taxes were $28,800 for the current year. Cash dividends paid on common stock during the current year totaled $34,073. The common stock was selling for $225 per share at the end of the year. Determine each of the following. Round answers to one decimal place, except for dollar amounts which should be rounded to the nearest whole cent. Use the rounded answers for subsequent requirements, if required. a. Times interest earned ratio 4 x times b. Earnings per share on common stock 25 V c. Price-earnings ratio d. Dividends per share of common stock 5.6 X e. Dividend yield 22 x % %24

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Ratio of Liabilities to Stockholders' Equity and Times Interest Earned The following data were taken from the financial statements of Hunter Inc. for December 31 of two recent years: Current Year Prior Year Accounts payable $518,000 $250,000 Current maturities of serial bonds payable 460,000 460,000 Serial bonds payable, 10% 2,070,000 2,530,000 Common stock, $1 par value 70,000 100,000 Paid-in capital in excess of par 840,000 840,000 Retained earnings 2,900,000 2,300,000 The income before income tax expense was $986,700 and $863,400 for the current and prior years, respectively. a. Determine the ratio of liabilities to stockholders' equity at the end of each year. Round to one decimal place. Current year fill in the blank 1 Prior year fill in the blank 2 b. Determine the times interest earned ratio for both years. Round to one decimal place. Current year fill in the blank 3 Prior year fill in the blank 4
3. Balance sheet and income statement data indicate the following: Bonds payable, 10% (due in two years) $936,000 Preferred 5% stock, $100 par (no change during year) 202,000 Common stock, $50 par (no change during year) 1,623,000 Income before income tax for year 380,000 Income tax for year 76,000 Common dividends paid 81,150 Preferred dividends paid 10,100 Based on the data presented, what is the times interest earned ratio (rounded to one decimal place)? a.7.1 b.5.1 c.4.1 d.3.1
Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets $5,300,000 Long-term debt (9% interest rate) $ 730, 000 Total stockholders' equity $ 2,500,000 Interest paid on long-term debt $ 65,700 Net income $ 400,000 Total assets at the beginning of the year were $5, 100,000; total stockholders' equity was $2,300,000. The company's tax rate is 40%. Required: 1. Compute the return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).) 2. Compute the return on equity. (Round your percentage answer to 1 decimal place (i. e., 0.1234 should be entered as 12.3).) 3. Is financial leverage positive or negative?
Balance sheet and income statement data indicate the following: Bonds payable, 10% (due in two years) $811,000 Preferred 5% stock, $100 par (no change during year) 236,000 Common stock, $50 par (no change during year) 1,500,000 Income before income tax for year 300,000 Income tax for year 79,000 Common dividends paid 75,000 Preferred dividends paid 11,800 Based on the data presented, what is the times interest earned ratio (rounded to one decimal place)? a.3.7 b.4.7 c.6.4 d.2.7
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The following information was taken from the financial statements of Zeil Inc. for December 31 of the current fiscal year: Common stock, $15 par value (no change during the year) $2,700,000 Preferred $4 stock, $100 par (no change during the year) 2,000,000 The net income was $656,000 and the declared dividends on the common stock were $45,000 for the current year. The market price of the common stock is $24.00 per share. For the common stock, determine (a) the earnings per share, (b) the price-earnings ratio, (c) the dividends per share, and (d) the dividend yield. If required, round your answers to two decimal places. a. Earnings per Share $fill in the blank 1 b. Price-Earnings Ratio fill in the blank 2 c. Dividends per Share $fill in the blank 3 d. Dividend Yield fill in the blank 4
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The following information has been derived from the accounts of Montgomery plc for the year ended 31 December 2005. On 31 December 2005 Current ratio 1.4:1 Quick ratio 0.9:1 Net current assets £32,000 Ordinary share capital in issue £150,000 Fixed assets as a percentage of shareholders’ funds 90% Debtors collection period 6 weeks For the year ended 31 December 2005 Net profit retained for the year as a percentage of ordinary share capital in issue 40% Annual rate of stock turnover 8.775 times Gross profit as a percentage of sales 25 On 31 December 2005 there were no current assets other than stock, debtors and bank balances and no liabilities other than ordinary shareholders’ funds and current liabilities. Assume a 52 week year.Calculate the amount of Montgomery plc current liabilities on 31 December 2005. A £22,857 B £28,800 C £44,800 D £80,000
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