Question
AutoSound, Inc. manufactures radios, tape players, and compact disk players for automobiles. Comparative balance sheets and income statements for 20x0 and 20x1 are presented here.
AutoSound, Inc. manufactures radios, tape players, and compact disk players for automobiles. Comparative balance sheets and income statements for 20x0 and 20x1 are presented here.
AutoSound, Inc. Comparative Balance Sheets
December 31, 20x1 and 20x0 (in thousands)
Assets 20x1 20x0 Current assets: Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 200 $ 170
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 90
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,000 2,500
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 4,200
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 60
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,395 7,020
Long-term investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 450 500
Property, furnishings, and equipment: Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000 2,000
Buildings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14,000 12,000
Equipment and furnishings, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7,000 6,000
Total property, furnishings, and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23,000 20,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,845 $27,520
Liabilities and Stockholders Equity Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500 $ 1,400
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 600 500
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 780 900
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,880 2,800
Long-term liabilities: Bonds payable ($1,000 face value; 10%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9,000 8,500
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,880 11,300
Stockholders equity:
Preferred stock ($100 par value; 8%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500 $ 1,500 Common stock ($10 par value) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 5,500 Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000 900
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11,465 8,320
Total stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19,965 16,220 T
otal liabilities and stockholders equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $31,845 $27,520
AutoSound, Inc. Comparative Income and Retained Earnings Statements For the Years Ended December 31, 20x1 and 20x0 (in thousands) 20x1 20x0 Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $26,700 $25,550 Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18,000 17,500 Gross margin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,700 8,050 Operating expenses: Selling expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,400 1,350 Administrative expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400 350 Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800 1,700 Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,900 6,350 Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 850 Income before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,000 5,500 Income-tax expense (30%) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,800 1,650 Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,200 3,850 Dividends on preferred stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120 120 Net income available to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4,080 3,730 Dividends on common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 935 730 Net income added to retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3,145 3,000 Retained earnings, January 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,320 5,320 Retained earnings, December 31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,465 $ 8,320 Additional Information _ All sales were made on account. _ Each share of preferred stock is convertible into five shares of common stock. _ The market price per share of common stock is $50 per share. _ 50,000 shares of common stock were issued on January 1, 20x1. Therefore, the weighted-average number of shares during 20x1 was 600,000 shares. Required: Compute each of the following amounts or ratios for 20x1.
15. Earnings per share.
16. Diluted earnings per share
. 17. Return on assets.
18. Return on equity.
19. Return on sales.
20. Dividend payout ratio.
21. Dividend yield ratio. Refer to the data given in the preceding problem for AutoSound, Inc.
22. Prepare a common-size balance sheet as of December 31, 20x1, and a common-size income and retained earnings statement for 20x1.
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