Question
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any
Comparative financial statements for Heritage Antiquing Services for the fiscal year ending December 31 appear on the following page. The company did not issue any new common or preferred stock during the year. A total of 600 thousand shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40%, and the dividend per share of common stock was $0.75. The market value of the companys common stock at the end of the year was $26. All of the companys sales are on account. |
Heritage Antiquing Services Comparative Balance Sheet (dollars in thousands) | ||||||
This Year | Last Year | |||||
Assets | ||||||
Current assets: | ||||||
Cash | $ | 1,080 | $ | 1,210 | ||
Accounts receivable, net | 9,000 | 6,500 | ||||
Inventory | 12,000 | 10,600 | ||||
Prepaid expenses | 600 | 500 | ||||
Total current assets | 22,680 | 18,810 | ||||
Property and equipment: | ||||||
Land | 9,000 | 9,000 | ||||
Buildings and equipment, net | 36,800 | 38,000 | ||||
Total property and equipment | 45,800 | 47,000 | ||||
Total assets | $ | 68,480 | $ | 65,810 | ||
Liabilities and Stockholders' Equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 18,500 | $ | 17,400 | ||
Accrued payables | 900 | 700 | ||||
Notes payable, short term | - | 100 | ||||
Total current liabilities | 19,400 | 18,200 | ||||
Long-term liabilities: | ||||||
Bonds payable | 8,000 | 8,000 | ||||
Total liabilities | 27,400 | 26,200 | ||||
Stockholders' equity: | ||||||
Preferred stock | 1,000 | 1,000 | ||||
Common stock | 2,000 | 2,000 | ||||
Additional paid-in capital | 4,000 | 4,000 | ||||
Total paid-in capital | 7,000 | 7,000 | ||||
Retained earnings | 34,080 | 32,610 | ||||
Total stockholders' equity | 41,080 | 39,610 | ||||
Total liabilities and stockholders' equity | $ | 68,480 | $ | 65,810 | ||
Heritage Antiquing Services Comparative Income Statement and Reconciliation (dollars in thousands) | ||||||
This Year | Last Year | |||||
Sales | $ | 66,000 | $ | 64,000 | ||
Cost of goods sold | 43,000 | 42,000 | ||||
Gross margin | 23,000 | 22,000 | ||||
Selling and administrative expenses: | ||||||
Selling expenses | 11,500 | 11,000 | ||||
Administrative expenses | 7,400 | 7,000 | ||||
Total selling and administrative expenses | 18,900 | 18,000 | ||||
Net operating income | 4,100 | 4,000 | ||||
Interest expense | 800 | 800 | ||||
Net income before taxes | 3,300 | 3,200 | ||||
Income taxes | 1,320 | 1,280 | ||||
Net income | 1,980 | 1,920 | ||||
Dividends to preferred stockholders | 60 | 400 | ||||
Net income remaining for common stockholders | 1,920 | 1,520 | ||||
Dividends to common stockholders | 450 | 450 | ||||
Net income added to retained earnings | 1,470 | 1,070 | ||||
Retained earnings, beginning of year | 32,610 | 31,540 | ||||
Retained earnings, end of year | $ | 34,080 | $ | 32,610 | ||
Required: | |
Compute the following financial ratios for common stockholders for this year: |
1. | Price-earnings ratio. (Round your intermediate calculations to 2 decimal places and final answer to 1 decimal place.) |
Price-earnings ratio |
2. | Dividend yield ratio. (Round your answer to 1 decimal place. Omit the "%" sign in your response.) |
Dividend yield ratio | % |
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