Question
Comparative financial statement data of Manfield, Inc. follow: Compute the following ratios for 2018 and 2017: a. Current ratio b. Cash ratio c. Times-interest-earned ratio
Comparative financial statement data of Manfield, Inc. follow:
Compute the following ratios for 2018 and 2017: | ||
a. | Current ratio | |
b. | Cash ratio | |
c. | Times-interest-earned ratio | |
d. | Inventory turnover | |
e. | Gross profit percentage | |
f. | Debt to equity ratio | |
g. | Rate of return on common stockholders' equity | |
h. | Earnings per share of common stock | |
i. | Price/earnings ratio | |
2. | Decide (a) whether Manfield's ability to pay debts and to sell inventory improved or deteriorated during 2018 and (b) whether the investment attractiveness of its common stock appears to have increased or decreased. |
Additional Info:
1. | Market price of Manfield's common stock: $66.15 at December 31, 2018, and $45.12 at December 31, 2017. |
2. | Common shares outstanding: 13,000 on December 31, 2018 and 12,000 on December 31, 2017 and 2016. |
3. | All sales are on credit. |
Manfield, Inc. | ||||
Comparative Income Statement | ||||
Years Ended December 31, 2018 and 2017 | ||||
2018 | 2017 | |||
Net Sales Revenue | $461,000 | $426,000 | ||
Cost of Goods Sold | 238,000 | 212,000 | ||
Gross Profit | 223,000 | 214,000 | ||
Operating Expenses | 134,000 | 132,000 | ||
Income From Operations | 89,000 | 82,000 | ||
Interest Expense | 9,000 | 10,000 | ||
Income Before Income Tax | 80,000 | 72,000 | ||
Income Tax Expense | 21,000 | 23,000 | ||
Net Income | $59,000 | $49,000 |
Manfield, Inc. | |||||
Comparative Balance Sheet | |||||
December 31, 2018 and 2017 | |||||
2018 | 2017 | 2016* | |||
Assets | |||||
Current Assets: | |||||
Cash | $92,000 | $90,000 | |||
Accounts Receivables, Net | 107,000 | 116,000 | $103,000 | ||
Merchandise Inventory | 143,000 | 163,000 | 203,000 | ||
Prepaid Expenses | 14,000 | 8,000 | |||
Total Current Assets | 356,000 | 377,000 | |||
Property, Plant, and Equipment, Net | 216,000 | 181,000 | |||
Total Assets | $572,000 | $558,000 | $596,000 | ||
Liabilities | |||||
Total Current Liabilities | $225,000 | $241,000 | |||
Long-term Liabilities | 119,000 | 98,000 | |||
Total Liabilities | 344,000 | 339,000 | |||
Stockholders' Equity | |||||
Preferred Stock, 4% | 98,000 | 98,000 | |||
Common Stockholders' Equity, no par | 130,000 | 121,000 | 89,000 | ||
Total Liabilities and Stockholders' Equity | $572,000 | $558,000 | |||
* Selected 2016 amounts |
I am all the way to g but I'm so confused, no matter how I calculate it I just keep getting answers that the program says wrong. But I literally follows what the books says to calculate it...... Question G is making me frustrated.
g. Compute the rate of return on common stockholders' equity of 2018 and 2017. (Round your answers to one tenth of a percent, X.X%.)
Rate of return on common stockholders' equity = (Net income - Preferred dividends) / Average common stockholder's equity
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