Based on the financial statements provided and assuming the market price of Draper’s stock is $200 per share and there are 100 shares of common stock outstanding, calculate the following ratios for the year ended December 31, 2019.  Round all amounts to TWO places past the decimal point.  Show your calculations in the boxes provided.   Current Ratio Debt Ratio Debt to Equity Ratio Earnings per Share Price to Earnings Ratio Return on Total Assets Return on Common Stockholders’ Equity

Fundamentals of Financial Management (MindTap Course List)
15th Edition
ISBN:9781337395250
Author:Eugene F. Brigham, Joel F. Houston
Publisher:Eugene F. Brigham, Joel F. Houston
Chapter4: Analysis Of Financial Statements
Section: Chapter Questions
Problem 24P: Income Statement for Year Ended December 31, 2018 (Millions of Dollars) Net sales 795.0 Cost of...
icon
Related questions
Question

Draper Consulting Inc.

Income Statement

Year Ended December 31, 2019

Sales Revenue

 

925,000

Less:  Cost of Goods Sold

 

490,000

Gross Profit

 

435,000

Expenses:

 

 

     Wages Expense

207,000

 

     Depreciation Expense

62,000

 

     Insurance Expense

17,000

 

     Interest Expense

12,000

 

     Income Tax Expense

57,000

 

          Total Expense

 

355,000

Other Income and (Expenses):

 

 

     Gain on Sale of Equipment

 

16,000

Net Income

 

96,000

 

Draper Consulting Inc.

Balance Sheet

December 31, 2019 and 2018

 

2019

2018

Assets:

Current Assets:

 

 

     Cash

25,000

33,000

     Accounts Receivable

68,000

51,000

     Inventory

177,000

126,000

     Prepaid Insurance

8,000

11,000

          Total Current Assets

278,000

221,000

Plant Assets:

 

 

     Equipment

887,000

763,000

     Less:  Accumulated Depreciation – Equipment

(191,000)

(175,000)

Total Assets

974,000

809,000

Liabilities:

Current Liabilities:

 

 

     Accounts Payable

37,000

27,000

     Interest Payable

7,000

0

     Income Tax Payable

11,000

19,000

          Total Current Liabilities

55,000

46,000

Long-Term Liabilities:

 

 

     Bonds Payable

145,000

80,000

Total Liabilities 

200,000

126,000

Stockholders' Equity:

     Common Stock

660,000

585,000

     Retained Earnings

166,000

98,000

     Less:  Treasury Stock

(52,000)

0

Total Stockholders' Equity

774,000

683,000

Total Liabilities and Stockholders' Equity

974,000

809,000

 

 

 

 

Draper Consulting, Inc.

Statement of Cash Flows

Year Ended December 31, 2019

Cash Flows from Operating Activities:

   

Net Income

 

      96,000

Adjustments to reconcile net income to net cash:

   

Depreciation Expense

          62,000

 

Gain on Sale of Equipment

        (16,000)

 

Increase in Accounts Receivable

        (17,000)

 

Increase in Inventory

        (51,000)

 

Decrease in Prepaid Insurance

           3,000

 

Increase in Accounts Payable

          10,000

 

Increase in Interest Payable

           7,000

 

Decrease in Income Tax Payable

          (8,000)

     (10,000)

Net Cash Provided by Operating Activities:

 

      86,000

Cash Flows from Investing Activities:

   

Sale of Equipment

          27,000

 

Purchase of Equipment

      (181,000)

 

Net Cash Used by Investing Activities:

 

   (154,000)

Cash Flows from Financing Activities:

   

Issuance of Bonds Payable

          65,000

 

Issuance of Common Stock

          75,000

 

Payment of Dividend

        (28,000)

 

Purchase of Treasury Stock

        (52,000)

 

Net Cash Provided by Financing Activities:

 

      60,000

Net increase in cash

 

       (8,000)

Cash Balance, December 31, 2018

 

      33,000

Cash Balance, December 31, 2019

 

      25,000

 

Based on the financial statements provided and assuming the market price of Draper’s stock is $200 per share and there are 100 shares of common stock outstanding, calculate the following ratios for the year ended December 31, 2019Round all amounts to TWO places past the decimal point.  Show your calculations in the boxes provided.

 

  1. Current Ratio
  2. Debt Ratio
  3. Debt to Equity Ratio
  4. Earnings per Share
  5. Price to Earnings Ratio
  6. Return on Total Assets
  7. Return on Common Stockholders’ Equity

 

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 3 images

Blurred answer
Knowledge Booster
Accounting for discounts
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Financial Accounting Intro Concepts Meth/Uses
Financial Accounting Intro Concepts Meth/Uses
Finance
ISBN:
9781285595047
Author:
Weil
Publisher:
Cengage
Intermediate Accounting: Reporting And Analysis
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
Cornerstones of Financial Accounting
Cornerstones of Financial Accounting
Accounting
ISBN:
9781337690881
Author:
Jay Rich, Jeff Jones
Publisher:
Cengage Learning
Fundamentals Of Financial Management, Concise Edi…
Fundamentals Of Financial Management, Concise Edi…
Finance
ISBN:
9781337902571
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Survey of Accounting (Accounting I)
Survey of Accounting (Accounting I)
Accounting
ISBN:
9781305961883
Author:
Carl Warren
Publisher:
Cengage Learning