The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 $5,375,000 $4,545,000 Net income $900,000 $925,000 Dividends: On preferred stock (45,000) (45,000) On common stock (50,000) (50,000) Increase in retained earnings $805,000 $830,000 Retained earnings, December 31 $6,180,000 $5,375,000 Stargel Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $10,000,000 $9,400,000 Cost of goods sold (5,350,000) (4,950,000) Gross profit $4,650,000 $4,450,000 Selling expenses $(2,000,000) $(1,880,000) Administrative expenses (1,500,000) (1,410,000) Total operating expenses $(3,500,000) $(3,290,000) Operating income $1,150,000 $1,160,000 Other revenue and expense: Other revenue 150,000 140,000 Other expense (interest) (170,000) (150,000) Income before income tax expense $1,130,000 $1,150,000 Income tax expense (230,000) (225,000) Net income $900,000 $925,000 Stargel Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $500,000 $400,000 Marketable securities 1,010,000 1,000,000 Accounts receivable (net) 740,000 510,000 Inventories 1,190,000 950,000 Prepaid expenses 250,000 229,000 Total current assets $3,690,000 $3,089,000 Long-term investments 2,350,000 2,300,000 Property, plant, and equipment (net) 3,740,000 3,366,000 Total assets $9,780,000 $8,755,000 Liabilities Current liabilities $900,000 $880,000 Long-term liabilities: Mortgage note payable, 10% $200,000 $0 Bonds payable, 10% 1,500,000 1,500,000 Total long-term liabilities $1,700,000 $1,500,000 Total liabilities $2,600,000 $2,380,000 Stockholders' Equity Preferred $0.90 stock, $10 par $500,000 $500,000 Common stock, $5 par 500,000 500,000 Retained earnings 6,180,000 5,375,000 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000 Required: Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital $fill in the blank 1 2. Current ratio fill in the blank 2 3. Quick ratio fill in the blank 3 4. Accounts receivable turnover fill in the blank 4 5. Number of days' sales in receivables fill in the blank 5 days 6. Inventory turnover fill in the blank 6 7. Number of days' sales in inventory fill in the blank 7 days 8. Ratio of fixed assets to long-term liabilities fill in the blank 8 9. Ratio of liabilities to stockholders' equity fill in the blank 9 10. Times interest earned fill in the blank 10 11. Asset turnover fill in the blank 11 12. Return on total assets fill in the blank 12 % 13. Return on stockholders’ equity fill in the blank 13 % 14. Return on common stockholders’ equity fill in the blank 14 % 15. Earnings per share on common stock $fill in the blank 15 16. Price-earnings ratio fill in the blank 16 17. Dividends per share of common stock $fill in the blank 17 18. Dividend yield fill in the blank 18

The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Retained earnings, January 1 $5,375,000 $4,545,000 Net income $900,000 $925,000 Dividends: On preferred stock (45,000) (45,000) On common stock (50,000) (50,000) Increase in retained earnings $805,000 $830,000 Retained earnings, December 31 $6,180,000 $5,375,000 Stargel Inc. Comparative Income Statement For the Years Ended December 31, 20Y2 and 20Y1 20Y2 20Y1 Sales $10,000,000 $9,400,000 Cost of goods sold (5,350,000) (4,950,000) Gross profit $4,650,000 $4,450,000 Selling expenses $(2,000,000) $(1,880,000) Administrative expenses (1,500,000) (1,410,000) Total operating expenses $(3,500,000) $(3,290,000) Operating income $1,150,000 $1,160,000 Other revenue and expense: Other revenue 150,000 140,000 Other expense (interest) (170,000) (150,000) Income before income tax expense $1,130,000 $1,150,000 Income tax expense (230,000) (225,000) Net income $900,000 $925,000 Stargel Inc. Comparative Balance Sheet December 31, 20Y2 and 20Y1 20Y2 20Y1 Assets Current assets: Cash $500,000 $400,000 Marketable securities 1,010,000 1,000,000 Accounts receivable (net) 740,000 510,000 Inventories 1,190,000 950,000 Prepaid expenses 250,000 229,000 Total current assets $3,690,000 $3,089,000 Long-term investments 2,350,000 2,300,000 Property, plant, and equipment (net) 3,740,000 3,366,000 Total assets $9,780,000 $8,755,000 Liabilities Current liabilities $900,000 $880,000 Long-term liabilities: Mortgage note payable, 10% $200,000 $0 Bonds payable, 10% 1,500,000 1,500,000 Total long-term liabilities $1,700,000 $1,500,000 Total liabilities $2,600,000 $2,380,000 Stockholders' Equity Preferred $0.90 stock, $10 par $500,000 $500,000 Common stock, $5 par 500,000 500,000 Retained earnings 6,180,000 5,375,000 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000 Required: Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital $fill in the blank 1 2. Current ratio fill in the blank 2 3. Quick ratio fill in the blank 3 4. Accounts receivable turnover fill in the blank 4 5. Number of days' sales in receivables fill in the blank 5 days 6. Inventory turnover fill in the blank 6 7. Number of days' sales in inventory fill in the blank 7 days 8. Ratio of fixed assets to long-term liabilities fill in the blank 8 9. Ratio of liabilities to stockholders' equity fill in the blank 9 10. Times interest earned fill in the blank 10 11. Asset turnover fill in the blank 11 12. Return on total assets fill in the blank 12 % 13. Return on stockholders’ equity fill in the blank 13 % 14. Return on common stockholders’ equity fill in the blank 14 % 15. Earnings per share on common stock $fill in the blank 15 16. Price-earnings ratio fill in the blank 16 17. Dividends per share of common stock $fill in the blank 17 18. Dividend yield fill in the blank 18

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 4PB

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Measures of liquidity, Solvency and Profitability

The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel common stock was $119.70 on December 31, 20Y2.

Stargel Inc.
Comparative Retained Earnings Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Retained earnings, January 1	$5,375,000		$4,545,000
Net income	$900,000		$925,000
Dividends:
	On preferred stock	(45,000)		(45,000)
	On common stock	(50,000)		(50,000)
Increase in retained earnings	$805,000		$830,000
Retained earnings, December 31	$6,180,000		$5,375,000

Stargel Inc.
Comparative Income Statement
For the Years Ended December 31, 20Y2 and 20Y1
	20Y2	20Y1
Sales	$10,000,000		$9,400,000
Cost of goods sold	(5,350,000)		(4,950,000)
Gross profit	$4,650,000		$4,450,000
Selling expenses	$(2,000,000)		$(1,880,000)
Administrative expenses	(1,500,000)		(1,410,000)
Total operating expenses	$(3,500,000)		$(3,290,000)
Operating income	$1,150,000		$1,160,000
Other revenue and expense:
Other revenue	150,000		140,000
Other expense (interest)	(170,000)		(150,000)
Income before income tax expense	$1,130,000		$1,150,000
Income tax expense	(230,000)		(225,000)
Net income	$900,000		$925,000

Stargel Inc.
Comparative Balance Sheet
December 31, 20Y2 and 20Y1
	20Y2	20Y1
Assets
Current assets:
	Cash	$500,000		$400,000
	Marketable securities	1,010,000		1,000,000
	Accounts receivable (net)	740,000		510,000
	Inventories	1,190,000		950,000
	Prepaid expenses	250,000		229,000
		Total current assets	$3,690,000		$3,089,000
Long-term investments	2,350,000		2,300,000
Property, plant, and equipment (net)	3,740,000		3,366,000
Total assets	$9,780,000		$8,755,000
Liabilities
Current liabilities	$900,000		$880,000
Long-term liabilities:
	Mortgage note payable, 10%	$200,000		$0
	Bonds payable, 10%	1,500,000		1,500,000
		Total long-term liabilities	$1,700,000		$1,500,000
Total liabilities	$2,600,000		$2,380,000
Stockholders' Equity
Preferred $0.90 stock, $10 par	$500,000		$500,000
Common stock, $5 par	500,000		500,000
Retained earnings	6,180,000		5,375,000
	Total stockholders' equity	$7,180,000		$6,375,000
Total liabilities and stockholders' equity	$9,780,000		$8,755,000

Required:

Determine the following measures for 20Y2, rounding to one decimal place, except dollar amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year.

1. Working capital	$fill in the blank 1
2. Current ratio	fill in the blank 2
3. Quick ratio	fill in the blank 3
4. Accounts receivable turnover	fill in the blank 4
5. Number of days' sales in receivables	fill in the blank 5	days
6. Inventory turnover	fill in the blank 6
7. Number of days' sales in inventory	fill in the blank 7	days
8. Ratio of fixed assets to long-term liabilities	fill in the blank 8
9. Ratio of liabilities to stockholders' equity	fill in the blank 9
10. Times interest earned	fill in the blank 10
11. Asset turnover	fill in the blank 11
12. Return on total assets	fill in the blank 12	%
13. Return on stockholders’ equity	fill in the blank 13	%
14. Return on common stockholders’ equity	fill in the blank 14	%
15. Earnings per share on common stock	$fill in the blank 15
16. Price-earnings ratio	fill in the blank 16
17. Dividends per share of common stock	$fill in the blank 17
18. Dividend yield	fill in the blank 18	%

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