Financial statements for Munoz Company follow. Assets Current assets Cash Marketable securities Accounts receivable (net) Inventories Prepaid items Total current assets Investments Plant (net) Land Total assets Liabilities and Stockholders' Equity Liabilities Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other Total noncurrent liabilities Total liabilities MUNOZ COMPANY Balance Sheets As of December 31 Year 4 Year 3 $ 21,000 21,000 51,000 136,000 25,000 254,000 22,000 260,000 28,000 $ 564,000 $ 17,000 7,000 43,000 144,000 10,000 221,000 15,000 245,000 23,000 $ 504,000 $ 24,600 $ 8,300 58,800 45,000 25,000 19,000 108,400 72,300 140,000 140,000 25,000 20,000 165,000 160,000 273,400 232,300 Current liabilities Notes payable Accounts payable Salaries payable Total current liabilities Noncurrent liabilities Bonds payable Other $ 24,600 58,800 $ 8,300 45,000 25,000 19,000 108,400 72,300 140,000 140,000 25,000 20,000 Total noncurrent liabilities Total liabilities 165,000 160,000 273,400 232,300 Stockholders' equity Preferred stock, (par value $10, 4% cumulative, non-participating; 8,000 shares authorized and issued) Common stock (no par; 50,000 shares authorized; 10,000 shares issued) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 80,000 80,000 80,000 80,000 130,600 290,600 111,700 271,700 $ 564,000 $ 504,000 Revenues Sales (net) MUNOZ COMPANY Statements of Income and Retained Earnings For the Years Ended December 31 Year 3 Other revenues Total revenues Expenses Cost of goods sold Selling, general, and administrative Interest expense Income tax expense Total expenses Net earnings (net income) Retained earnings, January 1 Less: Preferred stock dividends Common stock dividends Retained earnings, December 31 Required Year 4 $ 330,000 10,000 $ 310,000 7,000 340,000 317,000 165,000 133,000 65,000 60,000 11,000 10,200 73,000 72,000 314,000 275,200 26,000 41,800 111,700 77,000 3,200 3,200 3,900 $ 130,600 3,900 $ 111,700 Calculate the following ratios for Year 4 and Year 3. Since Year 2 numbers are not presented do not use averages when calculating the ratios for Year 3. Instead, use the number presented on the Year 3 balance sheet. Note: Round ratio answers to 2 decimal places unless otherwise indicated. Working capital Year 4 Year 3 a. Working capital $ 145,600 $ 148,700 b. Current ratio c. Quick ratio 2.34 3.06 0.86 0.93 e. Average days to collect accounts receivable g. Number of days to sell inventory d. Receivables turnover (beginning receivables at January 1, Year 3, were $44,000) f. Inventory turnover (beginning inventory at January 1, Year 3, was $150,000) 7.02 times 7.13 times 52 days 51 days 1.18 times 0.90 times 309 days 406 days h. Debt-to-assets ratio i. Debt-to-equity ratio j. Number of times interest was earned k. Plant assets to long-term debt I. Net margin m. Turnover of assets (average total assets in Year 3 is $504,000) 48 % 46 % 0.94 0.85 10.00 times 12.16 times 1.75 x 1.68 x 7.90 % 13.48 % 0.61 0.62 n. Return on investment (average total assets in Year 3 is $504,000) 24.14 % 28.72 % o. Return on equity (average stockholders' equity in Year 3 is $271,700) 8.95 % 15.38 % per per p. Earnings per share (total shares outstanding is unchanged) 2.28 3.86 share share per per q. Book value per share of common stock 21.06 19.17 share share r. Price-earnings ratio (market price per share: Year 3, $12.25; Year 4, $13.50) s. Dividend yield on common stock 5.92 3.17 2.90 % 3.20 %