Nineteen Measures of Solvency and Profitability The comparative Financial statements of Bettancort Inc. are as follows. The market price of BettancortInc. common stock was $71.25 on December 31, 2014. Bettancort Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2014 and 2013 2014 2013 Retaid earnings, January 1 $2,655,000 $2,400,000 Add net income for year 300,000 280,000 Total $2,955,000 $2,680,000 Deductdividends: On preferred stock $15,000 $15,000 On common stock 10,000 10,000 Total $25,000 $25,000 Retained earnings, December 31 $2,930,000 $2,655,000 Bettancort Inc. ComparativeIncome Statement For the Years Ended December 31, 2014 and 2013 2014 2013 Sales(all on account) $1,212,000 $1,010,000 Salesreturns and allowances 12,000 10,000 Sales $1,200,000 $1,000,000 Costof goods sold 500,000 475,000 Gross profit $700,000 $525,000 Selling expenses $240,000 $200,000 Administrative expenses 180,000 150,000 Total operating expenses $420,000 $350,000 Income from operations $280,000 $175,000 Other income 166,000 225,000 $446,000 $400,000 Otherexpense (interest) 66,000 60,000 Income before income tax $380,000 $340,000 Income tax expense 80,000 60,000 Net income $300,000 $280,000 Bettancort Inc. Comparative Balance Sheet December 31, 2014 and 2013 Dec. 31, 2014 Dec. 31, 2013 Assets Current assets: Cash $450,000 $400,000 Marketable securities 300,000 260,000 Accountsreceivable (net) 130,000 110,000 Inventories 67,000 58,000 Prepaid expenses 153,000 139,000 Total current assets $1,100,000 $967,000 Long-term investments 2,350,000 2,200,000 Property, plant, and equipment (net) 1,320,000 1,188,000 Total assets $4,770,000 $4,355,000 Liabilities Current liabilities $440,000 $400,000 Long-term liabilities: Mortgage note payable, 8%, due 2021 $100,000 $0 Bonds payable, 5%, due 2017 1,000,000 1,000,000 Total long-term liabilities $1,100,000 $1,000,000 Total liabilities $1,540,000 $1,400,000 Stockholders'Equity Preferred $0.75 stock, $10 par $200,000 $200,000 Commonstock, $10 par 100,000 100,000 Retained earnings 2,930,000 2,655,000 Total stockholders' equity $3,230,000 $2,955,000 Total liabilities and stockholders' equity $4,770,000 $4,355,000 Determine the following measures for 2014, rounding to one decimal place: 1.Working capital 2.Current ratio 3.Quick ratio 4.Accounts receivable turnover 5. Number of Days'sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges are earned 11. Number of times preferred dividends are earned 12. Ratio of net sales to assets 13. Rate earned on total Assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield

Nineteen Measures of Solvency and Profitability The comparative Financial statements of Bettancort Inc. are as follows. The market price of BettancortInc. common stock was $71.25 on December 31, 2014. Bettancort Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2014 and 2013 2014 2013 Retaid earnings, January 1 $2,655,000 $2,400,000 Add net income for year 300,000 280,000 Total $2,955,000 $2,680,000 Deductdividends: On preferred stock $15,000 $15,000 On common stock 10,000 10,000 Total $25,000 $25,000 Retained earnings, December 31 $2,930,000 $2,655,000 Bettancort Inc. ComparativeIncome Statement For the Years Ended December 31, 2014 and 2013 2014 2013 Sales(all on account) $1,212,000 $1,010,000 Salesreturns and allowances 12,000 10,000 Sales $1,200,000 $1,000,000 Costof goods sold 500,000 475,000 Gross profit $700,000 $525,000 Selling expenses $240,000 $200,000 Administrative expenses 180,000 150,000 Total operating expenses $420,000 $350,000 Income from operations $280,000 $175,000 Other income 166,000 225,000 $446,000 $400,000 Otherexpense (interest) 66,000 60,000 Income before income tax $380,000 $340,000 Income tax expense 80,000 60,000 Net income $300,000 $280,000 Bettancort Inc. Comparative Balance Sheet December 31, 2014 and 2013 Dec. 31, 2014 Dec. 31, 2013 Assets Current assets: Cash $450,000 $400,000 Marketable securities 300,000 260,000 Accountsreceivable (net) 130,000 110,000 Inventories 67,000 58,000 Prepaid expenses 153,000 139,000 Total current assets $1,100,000 $967,000 Long-term investments 2,350,000 2,200,000 Property, plant, and equipment (net) 1,320,000 1,188,000 Total assets $4,770,000 $4,355,000 Liabilities Current liabilities $440,000 $400,000 Long-term liabilities: Mortgage note payable, 8%, due 2021 $100,000 $0 Bonds payable, 5%, due 2017 1,000,000 1,000,000 Total long-term liabilities $1,100,000 $1,000,000 Total liabilities $1,540,000 $1,400,000 Stockholders'Equity Preferred $0.75 stock, $10 par $200,000 $200,000 Commonstock, $10 par 100,000 100,000 Retained earnings 2,930,000 2,655,000 Total stockholders' equity $3,230,000 $2,955,000 Total liabilities and stockholders' equity $4,770,000 $4,355,000 Determine the following measures for 2014, rounding to one decimal place: 1.Working capital 2.Current ratio 3.Quick ratio 4.Accounts receivable turnover 5. Number of Days'sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges are earned 11. Number of times preferred dividends are earned 12. Ratio of net sales to assets 13. Rate earned on total Assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter9: Metric-analysis Of Financial Statements

Section: Chapter Questions

Problem 9.4.17P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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Nineteen Measures of Solvency and Profitability

The comparative Financial statements of Bettancort Inc. are as follows. The market price of BettancortInc. common stock was $71.25 on December 31, 2014.

Bettancort Inc.

Comparative Retained Earnings Statement

For the Years Ended December 31, 2014 and 2013

2014 2013

Retaid earnings, January 1 $2,655,000 $2,400,000

Add net income for year 300,000 280,000

Total $2,955,000 $2,680,000

Deductdividends:

On preferred stock $15,000 $15,000

On common stock 10,000 10,000

Total $25,000 $25,000

Retained earnings, December 31 $2,930,000 $2,655,000

Bettancort Inc.

ComparativeIncome Statement

For the Years Ended December 31, 2014 and 2013

2014 2013

Sales(all on account) $1,212,000 $1,010,000

Salesreturns and allowances 12,000 10,000

Sales $1,200,000 $1,000,000

Costof goods sold 500,000 475,000

Gross profit $700,000 $525,000

Selling expenses $240,000 $200,000

Administrative expenses 180,000 150,000

Total operating expenses $420,000 $350,000

Income from operations $280,000 $175,000

Other income 166,000 225,000

$446,000 $400,000

Otherexpense (interest) 66,000 60,000

Income before income tax $380,000 $340,000

Income tax expense 80,000 60,000

Net income $300,000 $280,000

Bettancort Inc.

Comparative Balance Sheet

December 31, 2014 and 2013

Dec. 31, 2014 Dec. 31, 2013

Assets

Current assets:

Cash $450,000 $400,000

Marketable securities 300,000 260,000

Accountsreceivable (net) 130,000 110,000

Inventories 67,000 58,000

Prepaid expenses 153,000 139,000

Total current assets $1,100,000 $967,000

Long-term investments 2,350,000 2,200,000

Property, plant, and equipment (net) 1,320,000 1,188,000

Total assets $4,770,000 $4,355,000

Liabilities

Current liabilities $440,000 $400,000

Long-term liabilities:

Mortgage note payable, 8%, due 2021 $100,000 $0

Bonds payable, 5%, due 2017 1,000,000 1,000,000

Total long-term liabilities $1,100,000 $1,000,000

Total liabilities $1,540,000 $1,400,000

Stockholders'Equity

Preferred $0.75 stock, $10 par $200,000 $200,000

Commonstock, $10 par 100,000 100,000

Retained earnings 2,930,000 2,655,000

Total stockholders' equity $3,230,000 $2,955,000

Total liabilities and stockholders' equity $4,770,000 $4,355,000

Determine the following measures for 2014, rounding to one decimal place:

1.Working capital

2.Current ratio

3.Quick ratio

4.Accounts receivable turnover

5. Number of Days'sales in receivables

6. Inventory turnover

7. Number of days' sales in inventory

8. Ratio of fixed assets to long-term liabilities

9. Ratio of liabilities to stockholders' equity

10. Number of times interest charges are earned

11. Number of times preferred dividends are earned

12. Ratio of net sales to assets

13. Rate earned on total Assets

14. Rate earned on stockholders' equity

15. Rate earned on common stockholders' equity

16. Earnings per share on common stock

17. Price-earnings ratio

18. Dividends per share of common stock

19. Dividend yield

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