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A) Perform a complete ratio analysis for 2015 (yes all 14 of them!) using the formulas contained in the Ratio sheet of the file in
A) Perform a complete ratio analysis for 2015 (yes all 14 of them!) using the formulas contained in the Ratio sheet of the file in course documents called Allied Financials The ratios sheet is the first page of this document (You can omit the EBITDA Coverage ratio and the Price/Cash flow ratios) B) Determine Earnings Per Share (number of shares outstanding is 47,335) C) Determine P/E Multiplier (again there are 47,335 shares outstanding) D) Determine Market Book Ratio (market value of stock is $240 per share) Gateway Widget Company Income Statement Sales COGS Gross Profit Selling and Admin Expenses EBIT Interest Exp EBT Taxes FYE 2015 $ 2,869,164 $ 1.291,124 $ 1,578,040 $ 250,000 $ 1,328,040 $ 150,000 $ 1,178,040 $ 42,000 FYE 2014 $ 2.275.000 $ 910,000 $ 1,365,000 $ 240,000 $ 1,125,000 $ 152,500 $ 972,500 $ 29,625 Net Income $ 1.136.040 $ 942.875 Balance Sheet Assets Current Assets Cash Marketable Securities Accounts Receivable Inventory Total Current Assets Fixed Assets Plant and Equipment Net Total Fixed Assets $ $ $ FYE 2005 90,845 10,000 276,000 FYE 2004 $ 98,845 $ 10,000 $ 150,000 $147.500 $ 406,345 $ $ 337.875 714.720 $ $ $ 6,665.695 6,665,695 5.767.655 5,767,655 S Total Assets $ 7.380.415 6.174.000 Liabilities Current Liabilities Accounts Payable Notes Payable Total Current Liabilities $ 200,000.00 $ 104,625 $ 200,000.00 $ 104,625 Long Term Liabilities Long Term Notes Total Long Term Liabilities $ 1.500.000 $ 1.500.000 $ 1.525.000 $ 1.525.000 Total Liabilities $ 1.700.000 $ 1629 625 Equity Paid in Capital Retained Earnings Current Earnings Total Equity $ 50,000 $ 3,551.500 $ 50,000 $ 4,494,375 $ 1,136,040 $ 5.680 415 $ 942.875 $ 4,544,375 Total Liabilities and Equity 7.380 415 s 6.174.000 ABC Corp Income Statement. Sales: $750,500 Less: Cost of goods sold: 487,500 a) 263,000 Less:b 110,500 c) Interest Expense 79.500 f) Income Taxes 13,000 60,000 Number of shares outstanding: Shareholders equity (from balance sheet) Market price of stock: 10,000 $60,000 $24.00 per share h) What are the earnings per share of this company? i) What is the Price/Earnings (P/E) ratio for this company? j) What is the book value per share for this company? Pros Cons Sole Proprietorship Ease of set up Single level of taxation Control Less paperwork Unlimited liability Harder to raise capital Harder to transfer No joint expertise General Partnership Moderately easy to set up Single level of taxation Control rests with partners Two or more brains to work company Moderate tax reporting (Partnership return) Some paperwork Unlimited liability & disparity of partners can look to partners for capital Transfers can cause problems (spouses) C Corporation Limited liability Its own entity Easier to raise capital (issue stock, securities) Shared resources can be numerous Ease of transferability More extensive set up Corp level tax on earnings individual tax on dividends More complex tax filing Stockholders can be a pain More paperwork Control can be an issue S Corporations Limited liability Its own entity Easier to raise capital (issue stock, securities) but--> Shared resources can be numerous Pass through tax effect to individual, however- Ease of transferability but More extensive set up More complex tax filing Limited to no more than 100 Share Holders Stockholders can be a pain Entity income does not necessarily = cash Transfer can be heavily restricted Control can be an issue More paperwork Limited Liability Companies Limited liability Relative ease to set up Its own entity Members not shareholders Member managed or Manager managed Pass through tax effect to individual, however- Ability to pay disproportionate to capital More complex tax filing Control Transferability can be restrictive Members can be a pain Entity income does not necessarily = cash A) Perform a complete ratio analysis for 2015 (yes all 14 of them!) using the formulas contained in the Ratio sheet of the file in course documents called Allied Financials The ratios sheet is the first page of this document (You can omit the EBITDA Coverage ratio and the Price/Cash flow ratios) B) Determine Earnings Per Share (number of shares outstanding is 47,335) C) Determine P/E Multiplier (again there are 47,335 shares outstanding) D) Determine Market Book Ratio (market value of stock is $240 per share) Gateway Widget Company Income Statement Sales COGS Gross Profit Selling and Admin Expenses EBIT Interest Exp EBT Taxes FYE 2015 $ 2,869,164 $ 1.291,124 $ 1,578,040 $ 250,000 $ 1,328,040 $ 150,000 $ 1,178,040 $ 42,000 FYE 2014 $ 2.275.000 $ 910,000 $ 1,365,000 $ 240,000 $ 1,125,000 $ 152,500 $ 972,500 $ 29,625 Net Income $ 1.136.040 $ 942.875 Balance Sheet Assets Current Assets Cash Marketable Securities Accounts Receivable Inventory Total Current Assets Fixed Assets Plant and Equipment Net Total Fixed Assets $ $ $ FYE 2005 90,845 10,000 276,000 FYE 2004 $ 98,845 $ 10,000 $ 150,000 $147.500 $ 406,345 $ $ 337.875 714.720 $ $ $ 6,665.695 6,665,695 5.767.655 5,767,655 S Total Assets $ 7.380.415 6.174.000 Liabilities Current Liabilities Accounts Payable Notes Payable Total Current Liabilities $ 200,000.00 $ 104,625 $ 200,000.00 $ 104,625 Long Term Liabilities Long Term Notes Total Long Term Liabilities $ 1.500.000 $ 1.500.000 $ 1.525.000 $ 1.525.000 Total Liabilities $ 1.700.000 $ 1629 625 Equity Paid in Capital Retained Earnings Current Earnings Total Equity $ 50,000 $ 3,551.500 $ 50,000 $ 4,494,375 $ 1,136,040 $ 5.680 415 $ 942.875 $ 4,544,375 Total Liabilities and Equity 7.380 415 s 6.174.000 ABC Corp Income Statement. Sales: $750,500 Less: Cost of goods sold: 487,500 a) 263,000 Less:b 110,500 c) Interest Expense 79.500 f) Income Taxes 13,000 60,000 Number of shares outstanding: Shareholders equity (from balance sheet) Market price of stock: 10,000 $60,000 $24.00 per share h) What are the earnings per share of this company? i) What is the Price/Earnings (P/E) ratio for this company? j) What is the book value per share for this company? Pros Cons Sole Proprietorship Ease of set up Single level of taxation Control Less paperwork Unlimited liability Harder to raise capital Harder to transfer No joint expertise General Partnership Moderately easy to set up Single level of taxation Control rests with partners Two or more brains to work company Moderate tax reporting (Partnership return) Some paperwork Unlimited liability & disparity of partners can look to partners for capital Transfers can cause problems (spouses) C Corporation Limited liability Its own entity Easier to raise capital (issue stock, securities) Shared resources can be numerous Ease of transferability More extensive set up Corp level tax on earnings individual tax on dividends More complex tax filing Stockholders can be a pain More paperwork Control can be an issue S Corporations Limited liability Its own entity Easier to raise capital (issue stock, securities) but--> Shared resources can be numerous Pass through tax effect to individual, however- Ease of transferability but More extensive set up More complex tax filing Limited to no more than 100 Share Holders Stockholders can be a pain Entity income does not necessarily = cash Transfer can be heavily restricted Control can be an issue More paperwork Limited Liability Companies Limited liability Relative ease to set up Its own entity Members not shareholders Member managed or Manager managed Pass through tax effect to individual, however- Ability to pay disproportionate to capital More complex tax filing Control Transferability can be restrictive Members can be a pain Entity income does not necessarily = cash
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