The Harrison Bicycle Company had the following operating results for 2018-2019. In addition, the company paid dividends in both 2018 and 2019 of $90,000 per year and made capital expenditures in both years of $230,000 per year. The company's stock price in 2018 was $14.20 and $12.50 in 2019. Also in 2019, the industry average earnings multiple for the bicycle industry was 8 and the free cash flow and sales multiples were 16 and 1.35, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2019. Balance Sheet, Dec 31, 2019 2018 Cash $ 275,000 $ 108,000 Accounts Receivable $ 533,000 $ 408,000 Inventory $ 458,000 $ 308,000 Total Current Assets $ 1,266,000 $ 824,000 Long-lived Assets 1,245,000 1,140,000 Total Assets $ 2,511,000 $ 1,964,000 Current Liabilities $ 508,000 $ 308,000 Long-term Debt 680,000 580,000 Shareholder Equity 1,323,000 1,076,000 Total Debt and Equity $ 2,511,000 $ 1,964,000 Income Statement, for year ended Dec 31, 2019 2018 Sales $ 6,260,000 $ 5,480,000 Cost of Sales 5,155,000 4,470,000 Gross Margin 1,105,000 1,010,000 Operating Expenses 470,000 490,000 Operating Income 635,000 520,000 Taxes 298,000 201,000 Net Income $ 337,000 $ 319,000 Cash Flow From Operations 2019 2018 Net Income $ 337,000 $ 319,000 Plus Depreciation Expense 125,000 125,000 + Decrease (-inc) in AccRec. and Inv. (275,000 ) - + Increase (-dec) in Cur. Liabl. 200,000 - Cash Flow from Operations $ 387,000 $ 444,000 The current ratio for 2019 (rounded) is: Multiple Choice 2.5 3.6 1.8 4.1
The Harrison Bicycle Company had the following operating results for 2018-2019. In addition, the company paid dividends in both 2018 and 2019 of $90,000 per year and made capital expenditures in both years of $230,000 per year. The company's stock price in 2018 was $14.20 and $12.50 in 2019. Also in 2019, the industry average earnings multiple for the bicycle industry was 8 and the free cash flow and sales multiples were 16 and 1.35, respectively. The company is publicly owned and has 1,200,000 shares of outstanding stock at the end of 2019. Balance Sheet, Dec 31, 2019 2018 Cash $ 275,000 $ 108,000 Accounts Receivable $ 533,000 $ 408,000 Inventory $ 458,000 $ 308,000 Total Current Assets $ 1,266,000 $ 824,000 Long-lived Assets 1,245,000 1,140,000 Total Assets $ 2,511,000 $ 1,964,000 Current Liabilities $ 508,000 $ 308,000 Long-term Debt 680,000 580,000 Shareholder Equity 1,323,000 1,076,000 Total Debt and Equity $ 2,511,000 $ 1,964,000 Income Statement, for year ended Dec 31, 2019 2018 Sales $ 6,260,000 $ 5,480,000 Cost of Sales 5,155,000 4,470,000 Gross Margin 1,105,000 1,010,000 Operating Expenses 470,000 490,000 Operating Income 635,000 520,000 Taxes 298,000 201,000 Net Income $ 337,000 $ 319,000 Cash Flow From Operations 2019 2018 Net Income $ 337,000 $ 319,000 Plus Depreciation Expense 125,000 125,000 + Decrease (-inc) in AccRec. and Inv. (275,000 ) - + Increase (-dec) in Cur. Liabl. 200,000 - Cash Flow from Operations $ 387,000 $ 444,000 The current ratio for 2019 (rounded) is: Multiple Choice 2.5 3.6 1.8 4.1
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Harrison Bicycle Company had the following operating results for 2018-2019. In addition, the company paid dividends in both 2018 and 2019 of $90,000 per year and made capital expenditures in both years of $230,000 per year. The company's stock price in 2018 was $14.20 and $12.50 in 2019. Also in 2019, the industry average earnings multiple for the bicycle industry was 8 and the
| 2019 | 2018 | |||||
| Cash | $ | 275,000 | $ | 108,000 | ||
| Accounts Receivable | $ | 533,000 | $ | 408,000 | ||
| Inventory | $ | 458,000 | $ | 308,000 | ||
| Total Current Assets | $ | 1,266,000 | $ | 824,000 | ||
| Long-lived Assets | 1,245,000 | 1,140,000 | ||||
| Total Assets | $ | 2,511,000 | $ | 1,964,000 | ||
| Current Liabilities | $ | 508,000 | $ | 308,000 | ||
| Long-term Debt | 680,000 | 580,000 | ||||
| Shareholder Equity | 1,323,000 | 1,076,000 | ||||
| Total Debt and Equity | $ | 2,511,000 | $ | 1,964,000 | ||
| Income Statement, for year ended Dec 31, | ||||||
| 2019 | 2018 | |||||
| Sales | $ | 6,260,000 | $ | 5,480,000 | ||
| Cost of Sales | 5,155,000 | 4,470,000 | ||||
| Gross Margin | 1,105,000 | 1,010,000 | ||||
| Operating Expenses | 470,000 | 490,000 | ||||
| Operating Income | 635,000 | 520,000 | ||||
| Taxes | 298,000 | 201,000 | ||||
| Net Income | $ | 337,000 | $ | 319,000 | ||
| Cash Flow From Operations | 2019 | 2018 | |||||
| Net Income | $ | 337,000 | $ | 319,000 | |||
| Plus |
125,000 | 125,000 | |||||
| + Decrease (-inc) in AccRec. and Inv. | (275,000 | ) | - | ||||
| + Increase (-dec) in Cur. Liabl. | 200,000 | - | |||||
| Cash Flow from Operations | $ | 387,000 | $ | 444,000 | |||
The current ratio for 2019 (rounded) is:
Multiple Choice
-
2.5
-
3.6
-
1.8
-
4.1
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