Sedona Corporation declared and paid a cash dividend of $6,800 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement $ 120,000 56,000 64,000 38,000 4,200 21,800 6,540 $ 15,260 $ 107,000 52,000 55,000 34,600 4,200 16,200 4,860 $ 11,340 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) Net Income Balance Sheet $ 72,110 19,000 27,000 97,000 $ 215,110 $ 44,000 1,050 42,000 87,050 91,200 36,860 $ 36,000 14,000 40,000 107,000 $ 197,000 $ 34,800 600 42,000 77,400 91,200 28,400 $ 197,000 Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets Accounts Payable Income Tax Payable Notes Payable (long-term) Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $ 215,110
Sedona Corporation declared and paid a cash dividend of $6,800 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information: Current Year Previous Year Income Statement $ 120,000 56,000 64,000 38,000 4,200 21,800 6,540 $ 15,260 $ 107,000 52,000 55,000 34,600 4,200 16,200 4,860 $ 11,340 Sales Revenue Cost of Goods Sold Gross Profit Operating Expenses Interest Expense Income before Income Tax Expense Income Tax Expense (30%) Net Income Balance Sheet $ 72,110 19,000 27,000 97,000 $ 215,110 $ 44,000 1,050 42,000 87,050 91,200 36,860 $ 36,000 14,000 40,000 107,000 $ 197,000 $ 34,800 600 42,000 77,400 91,200 28,400 $ 197,000 Cash Accounts Receivable, Net Inventory Property and Equipment, Net Total Assets Accounts Payable Income Tax Payable Notes Payable (long-term) Total Liabilities Common Stock (par $10) Retained Earnings Total Liabilities and Stockholders' Equity $ 215,110
Financial Accounting: The Impact on Decision Makers
10th Edition
ISBN:9781305654174
Author:Gary A. Porter, Curtis L. Norton
Publisher:Gary A. Porter, Curtis L. Norton
Chapter2: Financial Statements And The Annual Report
Section: Chapter Questions
Problem 2.8E: Income Statement Ratio The income statement of Holly Enterprises shows operating revenues of...
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Help with req, 4,5,6,7 and 8. Thank you
Transcribed Image Text:Sedona Corporation declared and paid a cash dividend of $6,800 in the current year. Its comparative financial statements, prepared at
December 31, reported the following summarized information:
Current Year Previous Year
Income Statement
$ 120,000
56,000
64,000
38,000
4,200
21,800
6,540
$ 107,000
52,000
55,000
34,600
4,200
16,200
4,860
$ 11,340
Sales Revenue
Cost of Goods Sold
Gross Profit
Operating Expenses
Interest Expense
Income before Income Tax Expense
Income Tax Expense (30%)
Net Income
$ 15,260
Balance Sheet
$ 36,000
14,000
40,000
107,000
$ 197,000
$ 34,800
600
42,000
77,400
91,200
28,400
Cash
Accounts Receivable, Net
Inventory
Property and Equipment, Net
$ 72,110
19,000
27,000
97,000
Total Assets
$ 215,110
Accounts Payable
Income Tax Payable
Notes Payable (long-term)
Total Liabilities
Common Stock (par $10)
Retained Earnings
$ 44,000
1,050
42,000
87,050
91,200
36,860
Total Liabilities and Stockholders' Equity
$ 215,110
$ 197,000
Transcribed Image Text:Required:
1. Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for
the previous year?
2. Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the
previous year?
3. Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the
previous year?
4. Stockholders' equity totaled $102,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the
current and previous years. Are the current-year results better, or worse, than those for the previous year?
5. Net property and equipment totaled $112,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the
current and previous years. Are the current-year results better, or worse, than those for the previous year?
6. Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of
the company's asset growth?
7. Compute the times interest earned ratios for the current and previous years. Are the current-year results better, or worse, than those
for the previous year?
8. After Sedona Corporation released its current year's financial statements, the company's stock was trading at $20. After the release
of its previous year's financial statements, the company's stock price was $17 per share. Compute the P/E ratios for both years. Does
it appear that investors have become more (or less) optimistic about Sedona's future success?
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Required 3
Required 4
Required 5
Required 6
Required 7
Required 8
4-a. Stockholders' equity totaled $102,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios
for the current and previous years. (Round percentage values to 1 decimal place.)
4-b. Are the current-year results better, or worse, than those for the previous year?
4-a. Current Year
0.5 %
4-a. Previous Year
%
4-b. Current year return on equity ratio?
< Required 3
Required 5 >
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