Need a letter from president to shareholders created for the attached. Please use ORIGINAL work and make readable for layman.

This sheet provides the answers to the PRACTICE Problem based on the Rainbow Paint Company Data The sheet titled "Detail Computations" gives the specific ratio computations. Ratio 1 Working capital 2 Current ratio 3 Quick ratio 4 Accounts receivable turnover 5 Number of days' sales in receivables 6 Inventory turnover 7 Number of days' sales in inventory 8 Ratio of fixed assets to long-term liabilities 9 Ratio of liabilities to stockholders' equity 10 Number of times interest charges earned 11 Number of times preferred dividends earned 12 Ratio of net sales to assets 13 Rate earned on total assets 14 Rate earned on stockholders' equity 15 Rate earned on common stockholders' equity 16 Earnings per share on common stock 17 Price-earnings ratio 18 Dividends per share of common stock 19 Dividend yield Solution $750,000.00 2 1 13.33 Times 27.38 Days 5.67 64.41 Days 1.73 1.04 6.19 Times 6.13 Times 1.43 6.98% 13.59% 3.93% $4.10 6.1 $0.90 3.60% Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follow of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. 2013 Sales $5,125,000 Sales returns and allowances 125,000 Net sales $5,000,000 Cost of goods sold 3,400,000 Gross profit $1,600,000 Selling expenses $650,000 Administrative expenses 325,000 Total operating expenses $975,000 Income from operations $625,000 Other income 25,000 $650,000 Other expense (interest) 105,000 Income before income tax $545,000 Income tax expense 300,000 Net income $245,000 Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 Retained earnings, January 1 Add net income for year Total Deduct dividends: On preferred stock On common stock Total Retained earnings, December 31 2013 $723,000 245,000 $968,000 $40,000 45,000 $85,000 $883,000 Rainbow Paint Co. Comparative Balance Sheet December 31, 2013 and 2012 Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventories Prepaid expenses Total current assets 2013 $175,000 150,000 425,000 720,000 30,000 $1,500,000 Long-term investments Property, plant, and equipment (net) 250,000 2,093,000 Total assets Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2009 $3,843,000 Bonds payable, 8%, due 2012 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 800,000 $1,210,000 $1,960,000 Shares of Common Stock eps market value/common share $750,000 $410,000 $500,000 500,000 883,000 $1,883,000 $3,843,000 50000 nded December 31, 2013 and 2012 g December 31, 2013 and 2012 are as follows. The market price nd $25 on December 31, 2013. 2012 $3,257,600 57,600 $3,200,000 2,080,000 $1,120,000 $464,000 224,000 $688,000 $432,000 19,200 $451,200 64,000 $387,200 176,000 $211,200 he Years Ended December 31, 2013 2012 $581,800 211,200 $793,000 $40,000 30,000 $70,000 $723,000 Instructions Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 9. Ratio of liabilities to stockholders' equity 10.Number of times interest charges earned 11.Number of times preferred dividends earned 12.Ratio of net sales to assets 13.Rate earned on total assets 14.Rate earned on stockholders' equity 15.Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield 5000 50000 0.32 2012 $125,000 50,000 325,000 480,000 20,000 $1,000,000 225,000 1,948,000 $3,173,000 $650,000 - $800,000 $800,000 $1,450,000 $500,000 500,000 723,000 $1,723,000 $3,173,000 50000 This column contains the CORRECTED ratios. Formulas in cells. Refigured Formulas e the following measures for 2013: $ ts receivable turnover r of days' sales in receivables ry turnover r of days' sales in inventory f fixed assets to long-term liabilities f liabilities to stockholders' equity er of times interest charges earned r of times preferred dividends earned f net sales to assets arned on total assets arned on stockholders' equity arned on common stockholders' equity gs per share on common stock earnings ratio ends per share of common stock $ $ 750,000.00 current assets - current liabilities 2.00 current assets/current liabilities 1.00 cash + short term investments +AR / current liabili 13.33 net sales/average gross receivables 27.38 Gross receivables/(annual net sales /365) Cost 5.67of Goods Sold/Average inventory 64.41 (Ending inventory / cost of goods sold) X 365 1.73 fixed assets/ long term liabilities 1.04 liabilities/stockholders equity 6.19 Income before taxes and interest charges /interest c 6.13 Net income available to Preferred Stockholders/ann 1.43 net sales/average total assets 6.98% net income/average total assets 13.59% net income/ average stockholders equity 3.93% net income less preferred dividends (common stock 4.10 net income less preferred dividends (common stock 6.10 market price per share of common stock/ earnings 0.90 dividends on common stock /# of shares of commo 3.60% dividends per share of common stock/ market price # shares of preferred stock # of common stock shares required return on the stock 205000.00 0.04 ios. Formulas in cells. ents +AR / current liabilities net sales /365) f goods sold) X 365 27.375 64.41176 nterest charges /interest charges referred Stockholders/annual Preferred Dividends Requirement 0.163333 holders equity dividends (common stock) / average common stockholders equity dividends (common stock)/ Shares of common stock common stock/ earnings per share of common stock ck /# of shares of common stock mmon stock/ market price per share of common stock Unit 4 [AC499: Bachelor's Capstone in Accounting] Unit 4 Practice Activity: Financial Report Analysis - Rainbow Paint Co. Note: This is a practice activity to be performed before completing the Assignment for this unit. Also, this is the data to be used as the basis for your Unit 9 Final Project. The solutions for the Unit 4 Practice activity are located here. Rainbow Paint Co.'s comparative financial statements for the years ending December 31, 2013 and 2012 are as follows. The market price of Rainbow Paint Co.'s common stock was $30 on December 31, 1999 and $25 on December 31, 2013. Rainbow Paint Co. Comparative Income Statement For the Years Ended December 31, 2013 and 2012 Sales Sales returns and allowances Net sales Cost of goods sold Gross profit Selling expenses Administrative expenses Total operating expenses Income from operations Other income Income before Interest & Taxes 650,000 Other expense (interest) Income before income tax Income tax expense Net income 2013 $ 5,125,000 125,000 $ 5,000,000 3,400,000 $ 1,600,000 650,000 325,000 $ 975,000 $ 625,000 25,000 $ 105,000 545,000 300,000 $ 245,000 ======== $ Rainbow Paint Co. Comparative Retained Earnings Statement For the Years Ended December 31, 2013 and 2012 2013 Retained earnings, January 1 $ 723,000 Add net income for year 245,000 Total $ 968,000 Deduct dividends: $ 40,000 On preferred stock 45,000 On common stock $ 85,000 Total Retained earnings, December 31 $ 883,000 ======== 2012 $ 3,257,600 57,600 $ 3,200,000 2,080,000 $ 1,120,000 464,000 224,000 $ 688,000 $ 432,000 19,200 $ 451,200 64,000 387,200 176,000 $ 211,200 ======== $ $ $ $ 2012 581,800 211,200 793,000 40,000 30,000 $ 70,000 $ 723,000 ======== Unit 4 [AC499: Bachelor's Capstone in Accounting] Rainbow Paint C0, Comparative Balance Sheet December 31, 2013 and 2012 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 Liabilities Current liabilities Long-term liabilities: Mortgage note payable, 10%, due 2016 Bonds payable, 8%, due 2017 Total long-term liabilities Total liabilities Stockholders' Equity Preferred 8% stock, $100 par Common stock, $10 par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity 2013 $ 175,000 150,000 425,000 720,000 30,000 $ 1,500,000 250,000 2,093,000 $ 3,843,000 ======== $ $ 750,000 $ $ 410,000 800,000 $ 1,210,000 $ 1,960,000 $ 500,000 500,000 883,000 $ 1,883,000 $ 3,843,000 ======== Instructions: Determine the following measures for 2013: 1. Working capital 2. Current ratio 3. Quick ratio 4. Accounts receivable turnover 5. Number of days' sales in receivables 6. Inventory turnover 7. Number of days' sales in inventory 8. Ratio of fixed assets to long-term liabilities 2012 125,000 50,000 325,000 480,000 20,000 $ 1,000,000 225,000 1,948,000 $ 3,173,000 ======== 650,000 $ 800,000 $ 800,000 $ 1,450,000 $ 500,000 500,000 723,000 $ 1,723,000 $ 3,173,000 ========= Unit 4 [AC499: Bachelor's Capstone in Accounting] 9. Ratio of liabilities to stockholders' equity 10. Number of times interest charges earned 11. Number of times preferred dividends earned 12. Ratio of net sales to assets 13. Rate earned on total assets 14. Rate earned on stockholders' equity 15. Rate earned on common stockholders' equity 16. Earnings per share on common stock 17. Price-earnings ratio 18. Dividends per share of common stock 19. Dividend yield