EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN: 9781337514835
Author: MOYER
Publisher: CENGAGE LEARNING - CONSIGNMENT
expand_more
expand_more
format_list_bulleted
Question
Chapter 3, Problem 18P
a)
Summary Introduction
To determine: Earnings per share.
a)
Expert Solution
Explanation of Solution
Calculation of EPS:
Hence, Earnings per share (EPS) is $4.20
b)
Summary Introduction
To determine: Price-to-earnings ratio.
b)
Expert Solution
Explanation of Solution
Calculation of price-to-earnings ratio:
Hence, price earnings ratio is $7.6.
c)
Summary Introduction
To determine: Book value per share.
c)
Expert Solution
Explanation of Solution
Calculation of book value per share:
Hence, book value per share is $16
d)
Summary Introduction
To determine: Market-to-book ratio.
d)
Expert Solution
Explanation of Solution
Calculation of market-to-book ratio:
Hence, book value per share is $16
e)
Summary Introduction
To determine: EV-EBITDA multiple.
e)
Expert Solution
Explanation of Solution
Calculation of EV-EBITDA multiple:
EV is nothing but the enterprise value
Calculation of enterprise value:
Hence, enterprise value is $230 million
Calculation of EBITDA:
Hence, EBITDA is $50 million
Calculation of EV-EBITDA multiple:
Hence, EV-EBITDA multiple is 4.6 times
f)
Summary Introduction
To determine: Addition to
f)
Expert Solution
Explanation of Solution
Calculation of additions to retained earnings:
Hence, additions to retained earnings are $11million.
g)
Summary Introduction
To construct: New
g)
Expert Solution
Explanation of Solution
Excel spreadsheet:
Excel workings:
Want to see more full solutions like this?
Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
The balance sheet and income statement for the J. P.
Robard Mfg. Company are as follows:
Calculate the following ratios: Current ratio
Times interest earned
Inventory turnover
Total asset turnover
Operating profit margin
Operating return on assets
Debt ratio
Average collection period
Fixed asset turnover
Return on equity
J. P. Robard Mfg., Inc. Balance Sheet ($000)
Cash $550
Accounts receivable 2,100
Inventories 1,060
Current assets $3,710
Net fixed assets 4,520
Total assets $8,230
Accounts payable $1,200
Accrued expenses 610
Short-term notes payable 280
Current liabilities $2,090
Long-term debt 2,000
Owners' equity 4,140
Total liabilities and owners' equity $8,230
J. P. Robard Mfg., Inc. Income Statement ($000)
Net sales (all credit) $7,940
Cost of goods sold 3,310
Gross Profit $4,630
Operating expenses (includes $500 depreciation) 3,050
Net operating income $1,580
Interest expense 368
Earnings before taxes $1,212
Income taxes (40%) 485
Net income $727
Based on the income statement given calculate and explain the :profitability ratioa. Gross profit ratio = gross profit/net salesb. Operating margin ratio =operating income/net salesc. Asset Turnover ratio = net sales / total assetsd. Return on equity ratio = net sales/ shareholders equity
Leverage ratioa. interest coverage ratio =operating income / interest expensesb. Debt service ratio=operating income/debt service
The balance sheet and income statement for the J. P. Robard Mfg. Company are as follows:
LOADING...
.
Calculate the following ratios:
Current ratio
Times interest earned
Inventory turnover
Total asset turnover
Operating profit margin
Operating return on assets
Debt ratio
Average collection period
Fixed asset turnover
Return on equity
J. P. Robard Mfg., Inc.
Balance Sheet ($000)
Cash
$500
Accounts receivable
1,900
Inventories
1,020
Current assets
$3,420
Net fixed assets
4,540
Total assets
$7,960
Accounts payable
$1,150
Accrued expenses
570
Short-term notes payable
260
Current liabilities
$1,980
Long-term debt
1,910
Owners' equity
4,070
Total liabilities and owners' equity
$7,960
(Click
on the icon
in order to copy its contents into a
spreadsheet.)
J. P. Robard Mfg., Inc.
Income Statement ($000)
Net sales (all credit)
$8,040
Cost of goods…
Chapter 3 Solutions
EBK CONTEMPORARY FINANCIAL MANAGEMENT
Ch. 3 - Prob. 1QTDCh. 3 - Prob. 2QTDCh. 3 - Prob. 3QTDCh. 3 - Prob. 4QTDCh. 3 - Prob. 5QTDCh. 3 - Prob. 6QTDCh. 3 - Prob. 7QTDCh. 3 - Prob. 8QTDCh. 3 - Prob. 9QTDCh. 3 - Prob. 10QTD
Ch. 3 - Prob. 11QTDCh. 3 - Prob. 12QTDCh. 3 - Prob. 13QTDCh. 3 - Prob. 14QTDCh. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prob. 8PCh. 3 - Prob. 9PCh. 3 - Prob. 10PCh. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - Prob. 16PCh. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21P
Knowledge Booster
Similar questions
- Define each of the following terms: Liquidity ratios: current ratio; quick, or acid test, ratio Asset management ratios: inventory turnover ratio; days sales outstanding (DSO); fixed assets turnover ratio; total assets turnover ratio Financial leverage ratios: debt ratio; times-interest-earned (TIE) ratio; EBITDA coverage ratio Profitability ratios: profit margin on sales; basic earning power (BEP) ratio; return on total assets (ROA); return on common equity (ROE) Market value ratios: price/earnings (P/E) ratio; price/cash flow ratio; market/book (M/B) ratio; book value per share Trend analysis; comparative ratio analysis; benchmarking DuPont equation; window dressing; seasonal effects on ratiosarrow_forwardUsing the ratios below, summarize the financial performance of the company. LIQUIDITY RATIOS Current Ratio (times) 1.75 Quick Ratio (times) 0.52 Average Payment Period (days) 28.31 Days ASSET MANAGEMENT RATIOS Total Asset Turnover (times) 2.90 Average Collection Period (days) 24 Days Inventory Turnover (times) 5.70 FINANCIAL LEVERAGE RATIOS Total Debt to Total Assets 0.37% Equity Multiplier (times) 1.59 PROFITABILITY RATIOS Operating Profit Margin 5.66% Net Profit Margin 3.55% Return on Total Assets 16.57% Return on Equity 16.36% Earnings per Share $0.99arrow_forwardSelected current year company information follows: Net income. Net sales Total liabilities, beginning-year Total liabilities, end-of-year Total stockholders' equity, beginning-year Total stockholders' equity, end-of-year The total asset turnover is: (Do not round Intermediate calculations.) $ 16,753 720,855 91,932 111, 201 206,935 133,851arrow_forward
- Barry's BBQ had sales revenue for the year of $400 million and net income of $30 million. Total assets were $50 million at the beginning of the year, and $60 million at the end of the year. Required: Calculate the following ratios: (Do not round intermediate calculations. Round your answers to one decimal place.) 1. Return on assets ratio 2. Profit margin ratio 3. Asset turnover ratio Return on assets Profit margin Asset turnover % timesarrow_forwardThe financial statements for Armstrong and Blair companies for the current year are summarized below: Blair Company Statement of Financial Position Cash Accounts receivable (net) Inventory Property, plant, and equipment (net) Other non-current assets Total assets Current liabilities. Long-term debt (10%) Share capital Contributed surplus Retained earnings Total liabilities and shareholders' equity Statement of Earnings Sales revenue (1/3 on credit) Cost of sales Expenses (including interest and income tax) Net earnings Accounts receivable (net) Inventory Long-term debt Other data: Share price year-end Income tax rate Dividends declared and paid Shares Outstanding $ Selected data from the financial statements for the previous year follows: Blair Company Armstrong Company 30,000 82,000 94,000 $ 50,000 28,000 86,000 $ $ 18 30% 46,000 15,000 Armstrong Company $ 36,000 $ 32,000 30,000 40,000 205,000 35,000 170,000 95,000 $ 536,000 $ 125,000 94,000 180,000 40,000 97,000 $ 536,000 $ 550,000…arrow_forwardCompute profitability, liquidity, solvency and capital market standing ratios. Using the ratios computed above, evaluate company’s profitability,liquidity, solvency and capital market standing.arrow_forward
- See attached picturearrow_forwardHow do I solve this?arrow_forwardYou are given the following information for Company A.: sales = $73,900; costs = $54,100; addition to retained earnings = $5,700; dividends paid = $2,780; interest expense = $2,490; tax rate = 21 percent. What is Depreciation Expense for company Calculate the depreciation expense for the company.arrow_forward
- Waldale Pools has total equity of $289,100 and net income of $64,500. The debt-equity ratio is 0.4 and the total asset turnover is 1.6. What is the profit margin ?arrow_forwardCalculating the Average Total Assets and the Return on Assets The income statement, statement of retained earnings, and balance sheet for Somerville Company are as follows. Also, assume a tax rate of 31%. Somerville CompanyIncome StatementFor the Year Ended December 31, 20X2 Amount Percent Net sales $8,281,989 100.0% Less: Cost of goods sold (5,383,293) 65.0 Gross margin $2,898,696 35.0 Less: Operating expenses (1,323,368) 16.0 Operating income $1,575,328 19.0 Less: Interest expense (50,000) 0.6 Income before taxes $1,525,328 18.4 Less: Income taxes (31%)* (472,852) 5.7 Net income $1,052,476 12.7 * Includes both state and federal taxes. Somerville CompanyStatement of Retained EarningsFor the Year Ended December 31, 20X2 Balance, beginning of period $1,979,155 Net income $1,052,476 Total $3,031,631 Preferred dividends (80,000) Dividends to common stockholders (201,887) Balance, end of period…arrow_forwardGolden Corporation's current year income statement, comparative balance sheets, and additional information follow.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Intermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
Cornerstones of Financial AccountingAccountingISBN:9781337690881Author:Jay Rich, Jeff JonesPublisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...AccountingISBN:9781337115773Author:Maryanne M. Mowen, Don R. Hansen, Dan L. HeitgerPublisher:Cengage Learning
Intermediate Financial Management (MindTap Course...
Finance
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Cengage Learning
Cornerstones of Financial Accounting
Accounting
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Cengage Learning
Managerial Accounting: The Cornerstone of Busines...
Accounting
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Cengage Learning