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The following information applies to Acorn Construction Company (ACC): Net sales Income before interest and taxes Net income Interest expense Stockholders' equity, December 31 Common stock Preferred stock dividends Year 2 $ 1,020,000 134,500 52,000 31,500 824,300 764,300 31,000 Year 1 $ 614,000 91,000 45,000 22,000 739,000 714,000 31,000

The following information applies to Acorn Construction Company (ACC): Net sales Income before interest and taxes Net income Interest expense Stockholders' equity, December 31 Common stock Preferred stock dividends Year 2 $ 1,020,000 134,500 52,000 31,500 824,300 764,300 31,000 Year 1 $ 614,000 91,000 45,000 22,000 739,000 714,000 31,000

FINANCIAL ACCOUNTING
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 following information applies to Acorn Construction Company (ACC): Net sales Income before interest and taxes i Net income Interest expense Stockholders' equity, December 31 Common stock Preferred stock dividends, Year 2 $ 1,020,000 134,500 52,000 31,500 824,300 764,300 31,000 Information on the number of shares outstanding is provided below: Average number of shares outstanding Year 1 Average number of shares outstanding Year 2 Year 1 $ 614,000 91,000 45,000 22,000 739,000 714,000 31,000 45,000 40,000 Required: Compute the following ratios for ACC for Year 2 and Year 1: Note: Round your intermediate and final answers to 2 decimal places. a. Number of times interest is earned b. Earnings per share c. Price-earnings ratio (Market prices: Year 2 $18.50 per share, Year 1 $16.00 per share) d. Return on equity e. Net margin Year 2 % % Year 1 %
Transcribed Image Text:The following information applies to Acorn Construction Company (ACC): Net sales Income before interest and taxes i Net income Interest expense Stockholders' equity, December 31 Common stock Preferred stock dividends, Year 2 $ 1,020,000 134,500 52,000 31,500 824,300 764,300 31,000 Information on the number of shares outstanding is provided below: Average number of shares outstanding Year 1 Average number of shares outstanding Year 2 Year 1 $ 614,000 91,000 45,000 22,000 739,000 714,000 31,000 45,000 40,000 Required: Compute the following ratios for ACC for Year 2 and Year 1: Note: Round your intermediate and final answers to 2 decimal places. a. Number of times interest is earned b. Earnings per share c. Price-earnings ratio (Market prices: Year 2 $18.50 per share, Year 1 $16.00 per share) d. Return on equity e. Net margin Year 2 % % Year 1 %
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