Use the 2015 data for Prince Company. Assume a stock price of $28 per share. Compute the ratios. Prince Company paid $7,000 out in dividends for the year. Show how you can figure out that the company paid $7,000 out in dividends for the year. 2015 2014 Income Statement Sales revenue 190,000 167,000 Cost of goods sold 112,000 100,000 Gross profit 78,000 67,000 Operating expenses and interest expenses 56,000 53,000 Pretax income 22,000 14,000 Income tax 8,000 4,000 Net income 14,000 10,000 Balance Sheet Cash 4,000 7,000 Accounts receivable (net) 14,000 18,000 Inventory 40,000 34,000 Operational assets (net) 45,000 38,000 Total assets 103,000 97,000 Current liabilities (no interest) 16,000 17,000 Long-term liabilities (10% interest) 45,000 45,000 Common stock (par $5) 30,000 30,000 Retained earnings 12,000 5,000 Total Liabilities and Stockholders’ Equity 103,000 97,000
Requirement:
Use the 2015 data for Prince Company. Assume a stock price of $28 per share. Compute the ratios.
Prince Company paid $7,000 out in dividends for the year. Show how you can figure out that the company paid $7,000 out in dividends for the year.
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2015 |
2014 |
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Income Statement |
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Sales revenue |
190,000 |
167,000 |
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Cost of goods sold |
112,000 |
100,000 |
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Gross profit |
78,000 |
67,000 |
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Operating expenses and interest expenses |
56,000 |
53,000 |
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Pretax income |
22,000 |
14,000 |
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Income tax |
8,000 |
4,000 |
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Net income |
14,000 |
10,000 |
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Cash |
4,000 |
7,000 |
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14,000 |
18,000 |
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Inventory |
40,000 |
34,000 |
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Operational assets (net) |
45,000 |
38,000 |
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Total assets |
103,000 |
97,000 |
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Current liabilities (no interest) |
16,000 |
17,000 |
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Long-term liabilities (10% interest) |
45,000 |
45,000 |
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Common stock (par $5) |
30,000 |
30,000 |
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|
12,000 |
5,000 |
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Total Liabilities and |
103,000 |
97,000 |
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Profitability Ratios |
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1. |
Return on equity (ROE) |
Net Income ÷ Average Total Stockholders’ Equity |
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2. |
Return on assets (ROA) |
Net Income ÷ Average Total Assets |
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3. |
Gross profit percentage |
Gross Profit ÷ Net Sales Revenue |
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4. |
Net Profit (Income) margin |
Net Income ÷ Net Sales Revenue |
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5. |
Earnings per share (EPS) |
Net Income ÷ Weighted Average Number of Common Shares Outstanding |
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Asset Turnover Ratios |
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6. |
Total asset turnover ratio |
Net Sales Revenue ÷ Average Total Assets |
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7. |
Fixed asset turnover ratio |
Net Sales Revenue ÷ Average Net Fixed Assets |
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8. |
Accounts receivable turnover ratio |
Net Credit Sales ÷ Average Net Receivables |
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9. |
Inventory turnover ratio |
Cost of Goods Sold ÷ Average Inventory |
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10. |
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Current Assets ÷ Current Liabilities |
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11. |
Quick ratio |
Cash & Cash Equivalents + Net Accounts Receivable + Marketable Securities ÷ Current Liabilities |
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Solvency Ratios |
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12. |
Times interest earned ratio |
Net Income + Interest Expense + Income Tax Expense ÷ Interest Expense |
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13. |
Debt-to-equity ratio |
Total Liabilities ÷ Total Stockholders’ Equity |
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14. |
Price to Earnings (P/E) ratio |
Market Price per Share ÷ Earnings per Share |
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15. |
Dividend yield ratio |
Dividends per Share ÷ Market Price per Share |
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