Answer and Explanation:
The computation is shown below:-
1. Working capital = Current Assets - Current Liabilities
= $3,514,496 - $1,098,280
= $2,416,216
2. Current ratio = Current Assets ÷ Current Liabilities
= $3,514,496 ÷ $1,098,280
= 3.2 times
3. Quick ratio = Quick Assets ÷ Current Liabilities
= ($762,860 + $1,154,610 + $824,900 ) ÷ $1,098,280
= 2.496 times
4. Accounts receivable turnover = Sales ÷ Average accounts Receivable
= $4,316,490 ÷ ($824,900 + $773,800) ÷ 2
= $4,316,490 ÷ $799,350
= 5.4 times
5. Number of days sales in receivables = Number of days in a year ÷ Accounts receivable turnover
= 365 ÷ 5.4
= 67.59 Days
6. Inventory turnover = Cost of goods sold ÷ (Average Inventory)
= $1,553,440 ÷ ($627,800 + $481,800) ÷ 2
= $1,553,440 ÷ $554800
= 2.8
7. Number of days sales in inventory = Number of days in a year ÷ Inventory turnover
= 365 ÷ 2.8
= 130.36 Days
8. Ratio of fixed assets to long-term liabilities = Net Property, plant, and equipment ÷ Total long-term liabilities
= $4,550,000 ÷ $3,500,000
= 1.3
9. Ratio of liabilities to stockholders equity = Total liabilities ÷ Total stockholders' equity
= $4,598,280 ÷ $5,747,850
= 0.80
10. Times interest earned = Income from operations ÷ Other expense (interest)
= $1,070,460 ÷ $280,000
= 3.82
11. Asset turnover = Sales ÷ Average Total Assets
= $4,316,490 ÷ ($10,346,130 + $8,125,942) ÷ 2
= $4,316,490 ÷ $9,236,036
= 0.467
12. Return on total assets = Net Income ÷ Average Total Assets
= $745,200 ÷ $9,236,036
= 8.07%
13. Return on stockholders’ equity = Net Income ÷ Avg. stockholders’ equity
= $745,200 ÷ ($5,747,850 + $5,052,150) ÷ 2
= $745,200 ÷ $5,400,000
= 13.8%
14. Return on common stockholders’ equity = (Net Income - Preferred dividend) ÷ (Average common stockholders’ equity
)
= ($745,200 - $12,600) ÷ ($820,000 + $820,000 + $4,207,850 + $3,512,150) ÷ 2
= $732,600 ÷ $4,680,000
= 15.65%
15. Earnings per share on common stock = (Net Income - Preferred dividend) ÷ (Number of Outstanding shares
)
= $732,600 ÷ $82,000
= $8.93
16. Price-earnings ratio = Market price ÷ Earning per share
= $52 ÷ $8.93
= 5.82
17. Dividends per share of common stock = Dividend on common stock ÷ Number of Outstanding shares
= $36,900 ÷ $82,000
= $0.45
18. Dividend yield = Dividends per share of common stock ÷ Market price
= $0.45 ÷ $52
= 0.865%
Therefore we have applied the above formulas.
