Answer:
a) $3.57
(b) Return on common stockholders’ equity = 39.46%
(c) Return On Assets = 22.43%
(d) Current Ratio = 1.86 times
(e) Account Receivables Turnover Ratio = 16.74 times
(f) Average collection period = 21.8 days
(g) Inventory Turnover = 8.47 times
(h) Days in inventory = 43.09 days
(i) Times interest earned = 14.69 times
(j) Asset turnover = 1.96 times
(k) Debt to assets ratio = 41.24%
(l) Free cash flow = $24,952
Explanation:
(a) Earnings per share
Net income = $248,808
Beginning number of shares = Beginning Common stock / Par value = $354,000 / $5 = 70,800
Ending number of shares = Ending Common stock / Par value = $342,200 / $5 = = 68,440
Average Number of Shares Outstanding = (Beginning number of shares + Ending number of shares) / 2 = (68,440 + 70,800) / 2 = 69,620
Earning Per Shares = Net Income/ Average Number of Shares Outstanding = $248,808 / 69,620 = $3.57
(b) Return on common stockholders’ equity
Average Stockholders Equity = (Beginning Stockholders Equity + Ending Stockholders Equity) / 2 = ($549,172 + $712,012) / 2 = $630,592
Return on Stockholders Equity = Net Income / Average Stockholders Equity = $248,808 / $630,592 = 0.3946, or 39.46%
(c) Return on assets
Average total assets = (Ending total assets + Beginning total assets) / 2 = ($1,211,742 + 1,006,304) / 2 = $1,109,023
Return On Assets = Net Income / Average total assets = $248,808 / $1,109,023 = 0.2243, or 22.43%
(d) Current ratio
Current Ratio = Current Assets / Current Liabilities = $445,922 / $240,130 = 1.86 times
(e) Accounts receivable turnover
Average Account Receivables = (Beginning Account Receivables + Ending Account Receivables) / 2 = ($139,004 + $121,304) / 2 = $130,154
Account Receivables Turnover Ratio = Sales / Average Account Receivables = $2,178,400 / $130,154 = 16.74 times
(f) Average collection period
Average collection period = 365 / Account Receivables turnover ratio = 365 days /16.74 = 21.8 days
(g) Inventory turnover
Average Inventory = (Beginning inventory + Ending inventory) / 2 = ($148,680 + $136,290) / 2 = $142,485
Inventory Turnover = Cost of goods sold / average inventory = $1,207,000 / $142,485 = 8.47 times
(h) Days in inventory
Days in inventory = 365/ inventory turnover ratio = 365 days / 8.47 = 43.09 days
(i) Times interest earned
Times Interest Earned = Earnings before interest, taxes, depreciation, and amortization / Interest expenses = Income from operations / Interest expenses = $381,400 / $25,960 = 14.69 times
(j) Asset turnover
Asset turnover = Net sales / Average total assets = 2,178,400 / $1,109,023 = 1.96 times
(k) Debt to assets ratio
Debt to Asset Ratio = Total Debt / Total Assets = $499,730 / $1,211,742 = 0.4124, or 41.24%
(l) Free cash flow
Free cash flow = Net cash provided by operating activities - Capital expenditures - Cash dividends = $259,600- $160,480 - $74,168 = $24,952
