Comparative financial statement data of Banfield, Inc., follow: 1. Market price of Banfields common stock: $ 49.50
Question:
1. Market price of Banfield€™s common stock: $ 49.50 at December 31, 2014, and $ 27.02 at December 31, 2013
2. Common shares outstanding: 12,000 during 2014 and 12,000 during 2013
3. All sales are credit sales
Requirements
1. Compute the following ratios for 2014 and 2013:
a. Current ratio
b. Times- interest- earned ratio
c. Inventory turnover
d. Return on common stockholders€™ equity
e. Earnings per share of common stock
f. Price/ earnings ratio
2. Decide
(a) Whether Banfield€™s ability to pay debts and to sell inventory improved or deteriorated during 2014 and
(b) Whether the investment attractiveness of its common stock appears to have increased ordecreased.
Banfield, Inc. Comparative Income Statement For the Years Ended December 31, 2014 and 2013 amounts in thousands) 2014 2013 456,6505 423,260 216,000 6 Sales revenues 7 Less: Cost of goods sold 8 Gross profit 9 Less:Operating expenses 10 Operating income 11 Less Interest expense 12 Income before income taxes 13 Less: Income tax expense 14 Net income 15 245,000 211650 5 207,260 131,000 76,260 12,400 135,000 76,650 S 10,500 66,150 S ,850 58 39,100 Banfield, Inc. Comparative Balance Sheets December 31, 2014 and 2013 (amounts in thousands) 2014 2013 2012 Assets 7 Current assets: 8 Cash 9 Accounts receivable 10 Inventory 11 Prepaid expenses 12Total current assets 13 Property, plant, and equipment, net 14 Total assets 15 16 17 Current liabilities 18 Long-tem liabilities 19Total liabilities 20 21 22, Preferred stock5% 194.600 59 101000 111500 135,000 142,000 $010 145,000 215,000 11,500 8,000 352,0005 390,000 208,000 173,000 labilities 98,000 318,000 2 5,000 265,000 Stockholders equity 110,000 110,000 242000 S298000 560,000S 563000 , 23 Total common stockholders' equity 188000S 52,000 24 Totalstockholders' equity 25 26 Total liabilities and equity 27
Step by Step Answer:
Req 1 2014 2013 a Current ratio 352000 16 390000 15 220000 260000 ...View the full answer
Related Video
Inventory turnover is a key metric that helps businesses evaluate the efficiency of their operations. A high turnover ratio is generally considered positive, indicating that the company is effectively selling its inventory and making efficient use of its resources. On the other hand, a low turnover ratio may indicate issues such as overstocking or slow sales and may require further examination to identify and address the underlying causes. Businesses use this ratio to make decisions about inventory levels, production schedules, and pricing strategies. It also helps businesses to identify areas where they may need to make improvements, such as reducing lead times for production or optimizing sales and marketing efforts. Additionally, inventory turnover is used by investors and analysts as a key performance indicator to evaluate the financial health and growth potential of a company.
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