1. Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 500 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the company's common stock at the end of the year was $26. All of the company's sales are on account. Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,120 $ 1,330 Accounts receivable, net 9,600 6,800 Inventory 14,000 12,300 Prepaid expenses 730 670 Total current assets 25,450 21,100 Property and equipment: Land 10,100 10,100 Buildings and equipment, net 40,448 39,404 Total property and equipment 50,548 49,504 Total assets $ 75,998 $ 70,604 Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 68,000 $ 64,000 Cost of goods sold 40,000 38,000 Gross margin 28,000 26,000 Selling and administrative expenses: Selling expenses 11,500 10,500 Administrative expenses 6,400 6,700 Total selling and administrative expenses 17,900 17,200 Net operating income 10,100 8,800 Interest expense 960 960 Net income before taxes 9,140 7,840 Income taxes 3,656 3,136 Net income 5,484 4,704 Dividends to preferred stockholders 50 370 Net income remaining for common stockholders 5,434 4,334 Dividends to common stockholders 500 500 Net income added to retained earnings 4,934 3,834 Retained earnings, beginning of year 35,274 31,440 Retained earnings, end of year $ 40,208 $ 35,274 Required: Compute the following financial ratios for common stockholders for this year: 1 Gross margin percentage. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Gross margin percentage % 2 Earnings per share of common stock. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Earnings $ per share 3 Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.) Price-earnings ratio 4 Dividend payout ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place. Omit the "%" sign in your response.) Dividend payout ratio % 5 Dividend yield ratio. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Dividend yield ratio % 6 Return on total assets. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Return on total assets % 7 Return on common stockholders' equity. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) Return on common stockholders' equity % 8 Book value per share. (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Book value $ per share 2. value: 41.00 points Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the company's common stock at the end of the year was $21. All of the company's sales are on account. Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands) Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 74,385 $ 66,000 Cost of goods sold 46,620 39,000 Gross margin 27,765 27,000 Selling and administrative expenses: Selling expenses 10,600 10,300 Administrative expenses 6,800 6,100 Total selling and administrative expenses 17,400 16,400 Net operating income 10,365 10,600 Interest expense 990 990 Net income before taxes 9,375 9,610 Income taxes 3,750 3,844 Net income 5,625 5,766 Dividends to preferred stockholders 40 320 Net income remaining for common stockholders 5,585 5,446 Dividends to common stockholders 450 450 Net income added to retained earnings 5,135 4,996 Retained earnings, beginning of year 35,736 30,740 Retained earnings, end of year $ 40,871 $ 35,736 Required: Compute the following financial data for short-term creditors for this year: 1 Working capital. (Enter your answer in thousands of dollars. Omit the "$" sign in your response.) Working capital $ 2 Current ratio. (Round your answer to 2 decimal places.) Current ratio 3 Acid-test ratio. (Round your answer to 2 decimal places.) Acid-test ratio 4 Accounts receivable turnover. (Round your answer to 1 decimal place.) Accounts receivable turnover 5 Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) Average collection period days 6 Inventory turnover. (Round your answer to 1 decimal place.) Inventory turnover 7 Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 1 decimal place.) Average sale period days 3. value: 12.00 points Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $1.00. The market value of the company's common stock at the end of the year was $24. All of the company's sales are on account. Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands) This Year Last Year Assets Current assets: Cash $ 1,240 $ 1,410 Accounts receivable, net 11,000 7,200 Inventory 12,600 11,200 Prepaid expenses 680 500 Total current assets 25,520 20,310 Property and equipment: Land 10,600 10,600 Buildings and equipment, net 43,348 38,244 Total property and equipment 53,948 48,844 Total assets $ 79,468 $ 69,154 Liabilities and Stockholders' Equity Current liabilities: Accounts payable $ 20,400 $ 18,700 Accrued payables 920 800 Notes payable, short term 0 190 Total current liabilities 21,320 19,690 Long-term liabilities: Bonds payable 9,600 9,600 Total liabilities 30,920 29,290 Stockholders' equity: Preferred stock 1,000 1,000 Common stock 2,000 2,000 Additional paid-in capital 4,000 4,000 Total paid-in capital 7,000 7,000 Retained earnings 41,548 32,864 Total stockholders' equity 48,548 39,864 Total liabilities and stockholders' equity $ 79,468 $ 69,154 Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands) This Year Last Year Sales $ 71,000 $ 65,000 Cost of goods sold 36,000 42,000 Gross margin 35,000 23,000 Selling and administrative expenses: Selling expenses 11,300 10,600 Administrative expenses 7,200 6,900 Total selling and administrative expenses 18,500 17,500 Net operating income 16,500 5,500 Interest expense 960 960 Net income before taxes 15,540 4,540 Income taxes 6,216 1,816 Net income 9,324 2,724 Dividends to preferred stockholders 40 400 Net income remaining for common stockholders 9,284 2,324 Dividends to common stockholders 600 600 Net income added to retained earnings 8,684 1,724 Retained earnings, beginning of year 32,864 31,140 Retained earnings, end of year $ 41,548 $ 32,864 Required: Compute the following financial ratios for long-term creditors for this year: 1 Times interest earned ratio. (Round your answer to 1 decimal place. ) Times interest earned ratio 2 Debt-to-equity ratio. (Round your answer to 2 decimal places.) Debt-to-equity ratio  |
