Ratio Analysis of Comparative Financial Statements Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as follows: Miller Electronics Corporation Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 20-2 20-1 Net Sales (all on account) $652,950 $420,850 Cost of goods sold 393,300 260,850 Gross profit $259,650 $160,000 Administrative expenses $65,478 $42,790 Selling expenses 66,119 43,780 Total operating expenses $131,597 $86,570 Operating income $128,053 $73,430 Interest expense 1,263 1,184 Income before income taxes $126,790 $72,246 Income tax expense 30,509 13,565 Net income $96,281 $58,681 Miller Electronics Corporation Comparative Balance Sheet December 31, 20-2 and 20-1 20-2 20-1 Assets Current assets: Cash $43,480 $22,793 Receivables (net) 72,081 47,080 Merchandise inventory 90,899 49,503 Supplies and prepayments 3,649 1,141 Total current assets $210,109 $120,517 Property, plant, and equipment: Office equipment (net) $12,265 $8,730 Factory equipment (net) 103,894 70,270 Total property, plant, and equipment 116,159 $79,000 Total assets $326,268 $199,517 Liabilities Current liabilities Notes payable $10,090 $6,090 Accounts payable 42,697 30,159 Accrued and withheld payroll taxes 6,348 5,498 Total current liabilities $59,135 $41,747 Stockholders' Equity Common stock ($10 par) $100,000 $84,000 Retained earnings 167,133 73,770 Total stockholders' equity $267,133 $157,770 Total liabilities and stockholders' equity $326,268 $199,517 Required: Calculate the following ratios and amounts for 20-1 and 20-2. Round all calculations to two decimal places. Use 365 days when computing the accounts receivable and merchandise inventory turnover. (a) Return on assets (Total assets on January 1, 20-1, were $170,977.) (b) Return on common stockholders' equity (Total common stockholders' equity on January 1, 20-1, was $107,440.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.)

Ratio Analysis of Comparative Financial Statements Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as follows: Miller Electronics Corporation Comparative Income Statement For Years Ended December 31, 20-2 and 20-1 20-2 20-1 Net Sales (all on account) $652,950 $420,850 Cost of goods sold 393,300 260,850 Gross profit $259,650 $160,000 Administrative expenses $65,478 $42,790 Selling expenses 66,119 43,780 Total operating expenses $131,597 $86,570 Operating income $128,053 $73,430 Interest expense 1,263 1,184 Income before income taxes $126,790 $72,246 Income tax expense 30,509 13,565 Net income $96,281 $58,681 Miller Electronics Corporation Comparative Balance Sheet December 31, 20-2 and 20-1 20-2 20-1 Assets Current assets: Cash $43,480 $22,793 Receivables (net) 72,081 47,080 Merchandise inventory 90,899 49,503 Supplies and prepayments 3,649 1,141 Total current assets $210,109 $120,517 Property, plant, and equipment: Office equipment (net) $12,265 $8,730 Factory equipment (net) 103,894 70,270 Total property, plant, and equipment 116,159 $79,000 Total assets $326,268 $199,517 Liabilities Current liabilities Notes payable $10,090 $6,090 Accounts payable 42,697 30,159 Accrued and withheld payroll taxes 6,348 5,498 Total current liabilities $59,135 $41,747 Stockholders' Equity Common stock ($10 par) $100,000 $84,000 Retained earnings 167,133 73,770 Total stockholders' equity $267,133 $157,770 Total liabilities and stockholders' equity $326,268 $199,517 Required: Calculate the following ratios and amounts for 20-1 and 20-2. Round all calculations to two decimal places. Use 365 days when computing the accounts receivable and merchandise inventory turnover. (a) Return on assets (Total assets on January 1, 20-1, were $170,977.) (b) Return on common stockholders' equity (Total common stockholders' equity on January 1, 20-1, was $107,440.) (c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.)

Managerial Accounting: The Cornerstone of Business Decision-Making

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Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 38E: Sundahl Companys income statements for the past 2 years are as follows: Refer to the information for...

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Ratio Analysis of Comparative Financial Statements

Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as follows:

Miller Electronics Corporation Comparative Income Statement For Years Ended December 31, 20-2 and 20-1
	20-2	20-1
Net Sales (all on account)		$652,950	$420,850
Cost of goods sold		393,300	260,850
Gross profit		$259,650	$160,000
Administrative expenses		$65,478	$42,790
Selling expenses		66,119	43,780
Total operating expenses		$131,597	$86,570
Operating income		$128,053	$73,430
Interest expense		1,263	1,184
Income before income taxes		$126,790	$72,246
Income tax expense		30,509	13,565
Net income		$96,281	$58,681

Miller Electronics Corporation Comparative Balance Sheet December 31, 20-2 and 20-1
	20-2	20-1
Assets
Current assets:
Cash		$43,480	$22,793
Receivables (net)		72,081	47,080
Merchandise inventory		90,899	49,503
Supplies and prepayments		3,649	1,141
Total current assets		$210,109	$120,517
Property, plant, and equipment:
Office equipment (net)		$12,265	$8,730
Factory equipment (net)		103,894	70,270
Total property, plant, and equipment		116,159	$79,000
Total assets		$326,268	$199,517
Liabilities
Current liabilities
Notes payable		$10,090	$6,090
Accounts payable		42,697	30,159
Accrued and withheld payroll taxes		6,348	5,498
Total current liabilities		$59,135	$41,747
Stockholders' Equity
Common stock ($10 par)		$100,000	$84,000
Retained earnings		167,133	73,770
Total stockholders' equity		$267,133	$157,770
Total liabilities and stockholders' equity		$326,268	$199,517

Required:

Calculate the following ratios and amounts for 20-1 and 20-2. Round all calculations to two decimal places. Use 365 days when computing the accounts receivable and merchandise inventory turnover.

(a)	Return on assets (Total assets on January 1, 20-1, were $170,977.)
(b)	Return on common stockholders' equity (Total common stockholders' equity on January 1, 20-1, was $107,440.)
(c)	Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.)
(d)	Book value per share of common stock
(e)	Quick ratio
(f)	Current ratio
(g)	Working capital
(h)	Receivables turnover (Net receivables on January 1, 20-1, were $38,390.)
(i)	Merchandise inventory turnover (Merchandise inventory on January 1, 20-1, was $47,633.)
(j)	Debt-to-equity ratio
(k)	Asset turnover (Assets on January 1, 20-1, were $170,977.)
(l)	Times interest earned ratio
(m)	Profit margin ratio
(n)	Assets-to-equity ratio
(o)	Price-earnings ratio (The market price of the common stock was $100.00 and $85.00 on December 31, 20-2 and 20-1, respectively.)

a. Return on assets:
20-2	%
20-1	%
b. Return on common stockholders' equity:
20-2	%
20-1	%
c. Earnings per share of common stock:
20-2	$
20-1	$
d. Book value per share of common stock:
20-2	$
20-1	$
e. Quick ratio:
20-2	to 1
20-1	to 1
f. Current ratio:
20-2	to 1
20-1	to 1
g. Working capital:
20-2	$
20-1	$
h. Receivables turnover:
20-2	days
20-1	days
i. Merchandise inventory turnover:
20-2	days
20-1	days
j. Debt-to-equity ratio:
20-2	to 1
20-1	to 1
k. Asset turnover:
20-2	to 1
20-1	to 1
l. Times interest earned ratio:
20-2	times
20-1	times
m. Profit margin ratio:
20-2	%
20-1	%
n. Assets-to-equity ratio:
20-2	to 1
20-1	to 1
o. Price-earnings ratio:
20-2
20-1

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