ABC company's financial statements for the two most recent years follow: Last Year ABC Company Comparative Balance Sheet This Year Assets Current assets: Cash $ 135,000 Marketable securities 0 Accounts receivable, net 711,000 Inventory 1,125,000 Prepaid expenses 38,000 Total current assets 2,009,000 Plant and equipment, net 2,245,000 Total assets $ 4,254,000 Liabilities and Stockholders' Equity Liabilities: Current liabilities 850,000 Bonds payable, 128 800,000 Total liabilities 1,650,000 Stockholders' equity: Common stock, $15 par 870,000 Retained earnings 1,734,000 Total stockholders' equity 2,604,000 Total liabilities and stockholders' equity $ 4,254,000 $ 330,000 15,000 480,000 775,000 40,000 1,640,000 1,550,000 $ 3,190,000 $ 400,000 800,000 1,200,000 870,000 1,120,000 1,990,000 $ 3,190,000 ABC Company Comparative Income Statement and Reconciliation This Year Last Year Sales $ 5,900,000 $ 4,890,000 Cost of goods sold 4,055,000 3,630,000 Gross margin 1,845,000 1,260,000 Selling and administrative expenses 689,000 584,000 156.000 676.000 1,156,000 Net operating income 676,000 96.000 96,000 Interest expense You Net income before taxes 1,060,000 580,000 318,000 318.000 Income taxes (30%) 174,000 Net income 742,000 406,000 Common dividends 128,000 107,000 Net income retained 614,000 299,000 1,120,000 821,000 Beginning retained earnings Ending retained earnings $ 1,734,000 $ 1,120,000 Assess the company's profitability and stock market performance. Required: 1. You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. b. The dividend yield ratio. The company's stock is currently selling for $55 per share; last year it sold for $50 per share. c. The dividend payout ratio. d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 11) 2. You decide next to assess the company's profitability. Compute the following for both this year and last year: a. The gross margin percentage. b. The net profit margin percentage. Complete this question by entering your answers in the tabs below. Required 1 Required 2 You decide first to assess the company's stock market performance. For both this year and last year, compute: a. The earnings per share. There has been no change in common stock over the last two years. (Round your answers to 2 decimal places.) b. The dividend yield ratio. The company's stock is currently selling for $55 per share; last year it sold for $50 per share. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) c. The dividend payout ratio. (Do not round intermediate calculations. Round your percentage answers to 1 decimal place.) d. The price-earnings ratio. (Assume that the industry norm for the price-earnings ratio is 11.) (Do not round intermediate calculations. Round your answers to 2 decimal places.) Show less This Year Last Year $ 7.00 $ 12.79 % % a. Earnings per share b. Dividend yield ratio c. Dividend payout ratio d. Price-earnings ratio % % Required 1 Required 2 >
