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Haid cash for P9-4 Twenty metrics of liquidity, solvency, and profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The ne ket price of Automotive Solutions Inc, common stock was $119.70 on December 31,7 AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 2078 and 2017 2018 2017 $10,000,000 $ 9400,000 Sales 15350.000 14.950.000 Cost of goods sold $4450,000 $ 4650.000 Gross profit Selling expenses $ 12,000,000 $11.880,000) Administrative expenses 10.500.000 (1,410,000 Total operating expenses $13.500.000 $13.290.000 Operating Income $ 1.150,000 5 1,160,000 Other revenue and expenses Other revenue 150,000 140,000 Other expense Interest) (170.000 (150,000 Income before income tax $ 1,130,000 $ 1,150.000 Income tax expense (230.000 (225,000 Net income 900.000 $ 925.000 AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders' Equity For the Years Ended December 31, 2018 and 2017 20Y8 2017 Preferred Common Retained Preferred Common Retained Stock Stock Earnings Stock Stock Earnings 5500,000 $500,000 $5,375,000 $500,000 $500,000 $4,545,000 900,000 925.000 Balances, Jan. 1 Net income Dividends: Preferred stock Common stock Balances, Dec. 31 (45,000) 150,000 S500.000 $500.000 $5180.000 $500.000 145.000 (50,000) $500.000 55.375.000 AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet December 31, 2018 and 2017 Dec 31, 2048 Dec 31, 2017 Assets Current assets: Cash Marketable securities Accounts receivable (net Inventories Prepaid expenses Total current assets Long-term investments Property, plant and equipment (net Total assets $500,000 1,010,000 740,000 1.190,000 250,000 $3,690,000 2,350,000 3,740.000 59,780.000 $ 400.000 1.000.000 $10.000 950.000 229.000 $3,099.000 2300.000 3.366.00 $8.755.000 pter 9 Metric Analysis of Financial Statements Liabilities Current Habilities Long-term liabilities: $ 900,000 $ 880,000 Mortgage note payable, 10% Bonds payable, 10% Total long-term liabilities Total liabilities $ 200,000 1,500,000 $1,700,000 $2,600,000 Stockholders' Equity $ o 1,500,000 $1,500,000 $2.380,000 Preferred $0.90 stock, $10 par Common stock, $5 par Retained earnings Total stockholders'equity Total liabilities and stockholders' equity $ 500,000 500,000 6,180,000 $7,180,000 $9,780.000 $ 500,000 500,000 5,375,500 56,375,000 $8,755.000 Instructions one decimal place. Round earnings per share and dividends per share to the nearest cent. 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Days' sales in receivables 6. Inventory turnover 7. Days' sales in inventory 8. Debt ratio 9. Ratio of liabilities to stockholders' equity 10. Ratio of fixed assets to long-term liabilities 11. Times interest earned 12. Times preferred dividends earned 13. Asset turnover 14. Return on total assets 15. Return on stockholders' equity 16. Return on common stockholders' equity 17. Earnings per share on common stock 18. Price-earnings ratio 19. Dividends per share of common stock 20. Dividend yield X > Jx C D E F F G H Working capital $3,690.000 $900,000 $2,790,000 Ratio Calculated Value Numerator Denominator Current ratio $ 3.690.000 + $ 900,000 = 4.1 Quick ratio $ 2,250,000 - $ 900.000 = 2.5 Accounts receivable turnover $ 10,000,000 - $ 625,000 = 16.0 5. Days' sales in receivables $ 625.000 + 11 6. Inventory turnover $ 5,350,000 7. Days' sales in inventory $ 1,070,000 = 8. Debt ratio $ 2,600,000 11 9. Ratio of liabilities to stockholders' equity $ 2,600,000+ = 10. Ratio of fixed assets to long-term liabilities $ 3.740,000 - $ 1,700,000 = 2.2 . 11. Times interest earned $ 1,300.000 12. Times preferred dividends earned $ 900.000 + $ 45,000 1 20.0 13. Asset turnover $ 10,000,000 + $ 3,553,000 = 2.8 14. Return on total assets $ 1.070.000 11 15. Retrun on stockholders' equity 900,000 = 16. $ Return on common stockholders' equity 11 855.000 Pr. 9-4
