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54 DownloadDOCXFINANCIAL RATIOS2.12FinancialRatios.TheFormatCompany reports the following balance sheetdata:Current liabilities $280,000Bonds payable,16% $120,000Preferred stock, 14%, $100 parvalue $200,000Commonstock$25parvalue,16,800 $420,000Paid-in capital on commonstock$240,000Retainedearnings$180,000Incomebefore taxes is$160,000.The tax rateis40percent.Commonstockholdersequityin the previous year was $800,000. The market price per share of common stock is $35.Calculate(a) net income; (b)preferreddividends; (c)returnoncommonstock; (d) times interestearned;(e) earnings per share; (f)price/earningsratio; and (g) book value pershare.2.13Dividends.WilderCorporationscommon stock account for 20X3 and 20X2 showed:Commonstock,$10parvalue$45,000The following data are provided relative to 20X3 and 20X2:(a)Calculatethe dividends per share, dividend yield,and dividend payout,and (b) evaluatetheresults.2.14FinancialRatios.JonesCorporationsfinancial statements appear below.JonesCorporationBalanceSheetDecember31,20X1ASSETSCurrent assetsCash $100,000Marketablesecurities 200,000Inventory 300,000Totalcurrentassets$600,000Plantassets500,000Totalassets$1,100,00020X320X2Dividends$2,250$3,600Marketpricepershare$20$22Earnings pershare$ 2.13$ 2.67

LIABILITIES ANDSTOCKHOLDERSEQUITYLiabilitiesCurrentliabilities$200,000Long-termliabilities100,000Totalliabilities$300,000StockholdersequityCommonstock, $1parvalue,100,000shares$100,000Premium on commonstock500,000Retainedearnings200,000Totalstockholdersequity800,0Total liabilities andstockholdersequity$1,100,0JonesCorporationIncomeStatementFor theYearEndedDecember31,20X1Netsales$10,000,0Cost of goodssold6,000,0Grossprofit$Operating expenses1,000,0Income beforetaxes$Income taxes (50%rate)1,500,0Netincome$Additionalinformationincludes a marketprice of$150per share of stock, totaldividendsof$600,000for 20X1, and$250,000of inventoryas of December31, 20X0.Computethefollowingratios;(a)currentratio;(b)quick ratio;(c)inventoryturnover;(d)average ageofinventory;(e)debt/equityratio; (f)bookvalue per share; (g) earnings pershare;(h)price/earningsratio; (i) dividends per share; and (j) dividendpayout.2.18TheDuPont FormulaandReturn onTotal Assets.IndustryAhasthree companieswhoseincomestatements and balance sheets are summarized below.First supply the missing data in the table above. Then comment on the relativeperformanceof eachcompany.SalesCompanyX$500,000CompanyY(d)CompanyZ(g)Netincome$ 25,000$30,000(h)Total assets$100,000(e)$250,000Total assetturnover(a)(f)0.4Profitmargin(b)0.4%5%Return on total assets(ROA)(c)2%(i)

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