Instructions Using the financial statements and additional information, compute the following ratios for the El Camino Company for 2021. Show all computations. Computations 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio

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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The financial statements of El Camino Company appear below:
EL CAMINO COMPANY
Comparative Balance Sheet
December 31,
Assets
Cash
Debt investments
Accounts receivable (net)
Inventory
Property, plant and equipment (net)
Total assets
Liabilities and stockholders' equity
Accounts payable
Short-term notes payable
Bonds payable
Common stock
Retained earnings
Total liabilities and stockholders' equity..
Net sales (all on credit)
Cost of goods sold
Gross profit
Expenses
EL CAMINO COMPANY
Income Statement
For the Year Ended December 31, 2021
Interest expense
Selling expenses
Administrative expenses
Total expenses
Income before income taxes
Income tax expense
Net income
2021
$ 25,000
20,000
50,000
140,000
170,000
$405.000
$ 25,000
40,000
75,000
160,000
105,000
$405.000
$11,000
30,000
20,000
2020
$ 40,000
60,000
30,000
C. The market price of common stock on December 31, 2021, was $16 per share.
d.
Net cash provided by operating activities for 2021 was $70,000.
170,000
200.000
$500.000
$ 30,000
90,000
160,000
145,000
75,000
$500.000
$360,000
184,000
176,000
61.000
115,000
35,000
$80.000
Ex. 238 (Cont.)
Additional information:
a. Cash dividends of $50,000 were declared and paid on common stock in 2021.
b. The weighted-average number of shares of common stock outstanding during 2021 was
50,000.
Transcribed Image Text:The financial statements of El Camino Company appear below: EL CAMINO COMPANY Comparative Balance Sheet December 31, Assets Cash Debt investments Accounts receivable (net) Inventory Property, plant and equipment (net) Total assets Liabilities and stockholders' equity Accounts payable Short-term notes payable Bonds payable Common stock Retained earnings Total liabilities and stockholders' equity.. Net sales (all on credit) Cost of goods sold Gross profit Expenses EL CAMINO COMPANY Income Statement For the Year Ended December 31, 2021 Interest expense Selling expenses Administrative expenses Total expenses Income before income taxes Income tax expense Net income 2021 $ 25,000 20,000 50,000 140,000 170,000 $405.000 $ 25,000 40,000 75,000 160,000 105,000 $405.000 $11,000 30,000 20,000 2020 $ 40,000 60,000 30,000 C. The market price of common stock on December 31, 2021, was $16 per share. d. Net cash provided by operating activities for 2021 was $70,000. 170,000 200.000 $500.000 $ 30,000 90,000 160,000 145,000 75,000 $500.000 $360,000 184,000 176,000 61.000 115,000 35,000 $80.000 Ex. 238 (Cont.) Additional information: a. Cash dividends of $50,000 were declared and paid on common stock in 2021. b. The weighted-average number of shares of common stock outstanding during 2021 was 50,000.
Instructions
Using the financial statements and additional information, compute the following ratios for the El
Camino Company for 2021. Show all computations.
Computations
1. Current ratio
2. Return on common stockholders' equity
3.
Price-earnings ratio
4.
Inventory turnover
5. Accounts receivable turnover
6.
Times interest earned
7.
Profit margin
8.
Days in inventory
9.
Payout ratio
10. Return on assets
Transcribed Image Text:Instructions Using the financial statements and additional information, compute the following ratios for the El Camino Company for 2021. Show all computations. Computations 1. Current ratio 2. Return on common stockholders' equity 3. Price-earnings ratio 4. Inventory turnover 5. Accounts receivable turnover 6. Times interest earned 7. Profit margin 8. Days in inventory 9. Payout ratio 10. Return on assets
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