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kogti [31]
2 years ago
10

The comparative statements of Carla Vista Co. are presented here.

Business
1 answer:
Irina18 [472]2 years ago
8 0

Answer:

Carla Vista Co.

(a) Earnings per share = $3.57

(b) Return on common stockholders’ equity = 34.31%

(c) Return on assets = 19.79%

(d) Current ratio = 1.82

(e) Accounts receivable turnover = Net Sales/Average Receivable = 16.18 times

(f) Average collection period = 365 Days /Average Receivable Turnover ratio = 22.56 days

(g) Inventory turnover = Cost of goods sold/Average Inventory = 8.68 times

(h) Days in inventory = 42.05 days

(i) Times interest earned = 3.46 times

(j) Asset turnover = 1.81

(k) Debt to assets ratio = Total Debt/Total Assets = 42.31%

(l) Free cash flow = Cash from Operations - Capital Expenditures = $116,000

Explanation:

a) Data and Calculations:

CARLA VISTA CO.

Income Statements

For the Years Ended December 31

                                                               2017          2016

Net sales                                          $1,897,540   $1,757,500

Cost of goods sold                            1,065,540     1,013,000

Gross profit                                          832,000       744,500

Selling and administrative expenses 507,000       486,000

Income from operations                     325,000      258,500

Other expenses and losses:

Interest expense                                   24,000        22,000

Income before income taxes              301,000      236,500

Income tax expense                             94,000        75,000

Net income                                      $ 207,000    $ 161,500

CARLA VISTA CO.

Balance Sheets

December 31

Assets                                                            2017           2016

Current assets

Cash                                                           $ 60,100     $ 64,200

Debt investments (short-term)                    74,000        50,000

Accounts receivable                                   124,800      109,800

Inventory                                                     128,000       117,500

Total current assets                                  386,900      341,500

Plant assets (net)                                      659,000     530,300

Total assets                                          $1,045,900    $871,800

Liabilities and Stockholders’ Equity

Current liabilities

Accounts payable                                 $ 167,000     $152,400

Income taxes payable                               45,500        44,000

Total current liabilities                             212,500      196,400

Bonds payable                                        230,000      210,000

Total liabilities                                         442,500     406,400

Stockholders’ equity

Common stock ($5 par)                        290,000     300,000

Retained earnings                                  313,400      165,400

Total stockholders’ equity                    603,400     465,400

Total liabilities and

  stockholders’ equity                     $1,045,900    $871,800

Net cash provided by operating activities for 2017 = $251,000

Capital expenditures = $135,000,

2017 Ratios:

(a) Earnings per share = $207,000 ($ /58,000 shares) = $3.57

(b) Return on common stockholders’ equity = $207,000/$603,400 * 100 = 34.31%

(c) Return on assets = $207,000/$1,045,900 * 100 = 19.79%

(d) Current ratio = $386,900/212,500 = 1.82

Average Receivable = ($124,800 + 109,800)/2 = $117,300

(e) Accounts receivable turnover = Net Sales/Average Receivable

= $1,897,540/$117,300 = 16.18 times

(f) Average collection period = 365 Days /Average Receivable Turnover ratio. = 365/16.18 = 22.56 days

Average Inventory = ($128,000 + 117,500)/2 = $122,750

(g) Inventory turnover = Cost of goods sold/Average Inventory = $1,065,540/122,750 = 8.68 times

(h) Days in inventory = 365/8.68 = 42.05 days

(i) Times interest earned = Earnings before interest & taxes / Tax expense = $325,000/$94,000 = 3.46 times

(j) Asset turnover = Net Sales/Assets = $1,897,540/$1,045,900 = 1.81  

(k) Debt to assets ratio = Total Debt/Total Assets =  $442,500/$1,045,900 * 100 = 42.31%

(l) Free cash flow = Cash from Operations - Capital Expenditures = $251,000 - $135,000 = $116,000

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