Current ratio :1 2. Return on common stockholders' equity % 3. Price-earnings ratio times 4. Acid-test ratio :1 5. Accounts receivable turnover
Current ratio :1 2. Return on common stockholders' equity % 3. Price-earnings ratio times 4. Acid-test ratio :1 5. Accounts receivable turnover
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.3C
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Question
The financial statements of Hainz Company appear below:
HAINZ COMPANY Comparative Balance Sheet December 31 |
|||||
Assets | 2020 | 20169 | |||
Cash | $20,000 | $40,000 | |||
Short-term investments | 20,000 | 60,000 | |||
Accounts receivable (net) | 40,000 | 30,000 | |||
Inventory | 60,000 | 70,000 | |||
Property, plant and equipment (net) | 260,000 | 300,000 | |||
Total assets | $400,000 | $500,000 | |||
Liabilities and |
|||||
Accounts payable | $20,000 | $30,000 | |||
Short-term notes payable | 40,000 | 90,000 | |||
Bonds payable | 80,000 | 160,000 | |||
Common stock | 150,000 | 150,000 | |||
110,000 | 70,000 | ||||
Total liabilities and stockholders' equity | $400,000 | $500,000 |
HAINZ COMPANY Income Statement For the Year Ended December 31, 2020 |
||||
Net sales | $400,000 | |||
Cost of goods sold | 250,000 | |||
Gross profit | 150,000 | |||
Expenses | ||||
Operating expenses | $42,000 | |||
Interest expense | 18,000 | |||
Total expenses | 60,000 | |||
Income before income taxes | 90,000 | |||
Income tax expense | 27,000 | |||
Net income | $63,000 |
Additional information:
a. | Cash dividends of $23,000 were declared and paid in 2020. | |
b. | Weighted-average number of shares of common stock outstanding during 2020 was 30,000 shares. | |
c. | Market value of common stock on December 31, 2020, was $21 per share. |
Using the financial statements and additional information, compute the following ratios for Hainz Company for 2017. (Use 365 days for calculation. Round answers to 1 decimal place, e.g. 52.7.)
1. |
|
:1 | |||
2. | Return on common stockholders' equity |
|
% | ||
3. | Price-earnings ratio |
|
times | ||
4. | Acid-test ratio |
|
:1 | ||
5. | Accounts receivable turnover |
|
times | ||
6. | Times interest earned |
|
times | ||
7. | Profit margin |
|
% | ||
8. | Days in inventory |
|
days | ||
9. | Payout ratio |
|
% | ||
10. | Return on assets |
|
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