Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $58 on December 31, 20Y8. AUTOMOTIVE SOLUTIONS INC.Comparative Income StatementFor the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 Sales $4,681,125 $4,312,980 Cost of goods sold (1,553,440) (1,429,160) Gross profit $3,127,685 $2,883,820 Selling expenses $(1,090,440) $(1,327,530) Administrative expenses (928,885) (779,660) Total operating expenses (2,019,325) (2,107,190) Operating income $1,108,360 $776,630 Other revenue and expense: Other income 58,340 49,570 Other expense (interest) (304,000) (167,200) Income before income tax $862,700 $659,000 Income tax expense (103,500) (78,800) Net income $759,200 $580,200 AUTOMOTIVE SOLUTIONS INC.Comparative Statement of Stockholders’ EquityFor the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 PreferredStock CommonStock RetainedEarnings PreferredStock CommonStock RetainedEarnings Balances, Jan. 1 $700,000 $800,000 $3,351,300 $700,000 $800,000 $2,832,900 Net income 759,200 580,200 Dividends: Preferred stock (9,800) (9,800) Common stock (52,000) (52,000) Balances, Dec. 31 $700,000 $800,000 $4,048,700 $700,000 $800,000 $3,351,300 AUTOMOTIVE SOLUTIONS INC.Comparative Balance SheetDecember 31, 20Y8 and 20Y7 Dec. 31, 20Y8 Dec. 31, 20Y7 Assets Current assets: Cash $912,060 $814,010 Temporary investments 1,380,420 1,348,930 Accounts receivable (net) 846,800 795,700 Inventories 627,800 481,800 Prepaid expenses 172,559 162,800 Total current assets $3,939,639 $3,603,240 Long-term investments 2,042,891 1,081,139 Property, plant, and equipment (net) 4,560,000 4,104,000 Total assets $10,542,530 $8,788,379 Liabilities Current liabilities $1,193,830 $1,847,079 Long-term liabilities: Mortgage note payable, 8%, due in 15 years $1,710,000 $0 Bonds payable, 8%, due in 20 years 2,090,000 2,090,000 Total long-term liabilities $3,800,000 $2,090,000 Total liabilities $4,993,830 $3,937,079 Stockholders' Equity Preferred $0.70 stock, $50 par $700,000 $700,000 Common stock, $10 par 800,000 800,000 Retained earnings 4,048,700 3,351,300 Total stockholders' equity $5,548,700 $4,851,300 Total liabilities and stockholders' equity $10,542,530 $8,788,379 Instructions: Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year. 1. Working capital $ 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Days' sales in receivables days 6. Inventory turnover 7. Days' sales in inventory days 8. Debt ratio % 9. Ratio of liabilities to stockholders' equity 10. Ratio of fixed assets to long-term liabilities 11. Times interest earned times 12. Times preferred dividends earned times 13. Asset turnover 14. Return on total assets % 15. Return on stockholders’ equity % 16. Return on common stockholders’ equity % 17. Earnings per share on common stock $ 18. Price-earnings ratio 19. Dividends per share of common stock $ 20. Dividend yield %

Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $58 on December 31, 20Y8. AUTOMOTIVE SOLUTIONS INC.Comparative Income StatementFor the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 Sales $4,681,125 $4,312,980 Cost of goods sold (1,553,440) (1,429,160) Gross profit $3,127,685 $2,883,820 Selling expenses $(1,090,440) $(1,327,530) Administrative expenses (928,885) (779,660) Total operating expenses (2,019,325) (2,107,190) Operating income $1,108,360 $776,630 Other revenue and expense: Other income 58,340 49,570 Other expense (interest) (304,000) (167,200) Income before income tax $862,700 $659,000 Income tax expense (103,500) (78,800) Net income $759,200 $580,200 AUTOMOTIVE SOLUTIONS INC.Comparative Statement of Stockholders’ EquityFor the Years Ended December 31, 20Y8 and 20Y7 20Y8 20Y7 PreferredStock CommonStock RetainedEarnings PreferredStock CommonStock RetainedEarnings Balances, Jan. 1 $700,000 $800,000 $3,351,300 $700,000 $800,000 $2,832,900 Net income 759,200 580,200 Dividends: Preferred stock (9,800) (9,800) Common stock (52,000) (52,000) Balances, Dec. 31 $700,000 $800,000 $4,048,700 $700,000 $800,000 $3,351,300 AUTOMOTIVE SOLUTIONS INC.Comparative Balance SheetDecember 31, 20Y8 and 20Y7 Dec. 31, 20Y8 Dec. 31, 20Y7 Assets Current assets: Cash $912,060 $814,010 Temporary investments 1,380,420 1,348,930 Accounts receivable (net) 846,800 795,700 Inventories 627,800 481,800 Prepaid expenses 172,559 162,800 Total current assets $3,939,639 $3,603,240 Long-term investments 2,042,891 1,081,139 Property, plant, and equipment (net) 4,560,000 4,104,000 Total assets $10,542,530 $8,788,379 Liabilities Current liabilities $1,193,830 $1,847,079 Long-term liabilities: Mortgage note payable, 8%, due in 15 years $1,710,000 $0 Bonds payable, 8%, due in 20 years 2,090,000 2,090,000 Total long-term liabilities $3,800,000 $2,090,000 Total liabilities $4,993,830 $3,937,079 Stockholders' Equity Preferred $0.70 stock, $50 par $700,000 $700,000 Common stock, $10 par 800,000 800,000 Retained earnings 4,048,700 3,351,300 Total stockholders' equity $5,548,700 $4,851,300 Total liabilities and stockholders' equity $10,542,530 $8,788,379 Instructions: Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year. 1. Working capital $ 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Days' sales in receivables days 6. Inventory turnover 7. Days' sales in inventory days 8. Debt ratio % 9. Ratio of liabilities to stockholders' equity 10. Ratio of fixed assets to long-term liabilities 11. Times interest earned times 12. Times preferred dividends earned times 13. Asset turnover 14. Return on total assets % 15. Return on stockholders’ equity % 16. Return on common stockholders’ equity % 17. Earnings per share on common stock $ 18. Price-earnings ratio 19. Dividends per share of common stock $ 20. 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 9.4.9P: Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of...

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Twenty metrics of liquidity, Solvency, and Profitability

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $58 on December 31, 20Y8.

AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 20Y8 and 20Y7
	20Y8	20Y7
Sales	$4,681,125		$4,312,980
Cost of goods sold	(1,553,440)		(1,429,160)
Gross profit	$3,127,685		$2,883,820
Selling expenses	$(1,090,440)		$(1,327,530)
Administrative expenses	(928,885)		(779,660)
Total operating expenses	(2,019,325)		(2,107,190)
Operating income	$1,108,360		$776,630
Other revenue and expense:
Other income	58,340		49,570
Other expense (interest)	(304,000)		(167,200)
Income before income tax	$862,700		$659,000
Income tax expense	(103,500)		(78,800)
Net income	$759,200		$580,200

AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders’ Equity For the Years Ended December 31, 20Y8 and 20Y7
	20Y8	20Y7
	Preferred Stock	Common Stock	Retained Earnings	Preferred Stock	Common Stock	Retained Earnings
Balances, Jan. 1		$700,000			$800,000		$3,351,300	$700,000	$800,000	$2,832,900
Net income							759,200			580,200
Dividends:
Preferred stock							(9,800)			(9,800)
Common stock							(52,000)			(52,000)
Balances, Dec. 31		$700,000			$800,000		$4,048,700	$700,000	$800,000	$3,351,300

AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet December 31, 20Y8 and 20Y7
	Dec. 31, 20Y8	Dec. 31, 20Y7
Assets
Current assets:
Cash	$912,060		$814,010
Temporary investments	1,380,420		1,348,930
Accounts receivable (net)	846,800		795,700
Inventories	627,800		481,800
Prepaid expenses	172,559		162,800
Total current assets	$3,939,639		$3,603,240
Long-term investments	2,042,891		1,081,139
Property, plant, and equipment (net)	4,560,000		4,104,000
Total assets	$10,542,530		$8,788,379
Liabilities
Current liabilities	$1,193,830		$1,847,079
Long-term liabilities:
Mortgage note payable, 8%, due in 15 years	$1,710,000		$0
Bonds payable, 8%, due in 20 years	2,090,000		2,090,000
Total long-term liabilities	$3,800,000		$2,090,000
Total liabilities	$4,993,830		$3,937,079
Stockholders' Equity
Preferred $0.70 stock, $50 par	$700,000		$700,000
Common stock, $10 par	800,000		800,000
Retained earnings	4,048,700		3,351,300
Total stockholders' equity	$5,548,700		$4,851,300
Total liabilities and stockholders' equity	$10,542,530		$8,788,379

Instructions:

Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.

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

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