Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Need help with below: Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price

Need help with below:

Twenty metrics of liquidity, Solvency, and Profitability

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $119.70 on December 31, 20Y8.

AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 20Y8 and 20Y7
20Y8 20Y7
Sales $10,000,000 $ 9,400,000
Cost of goods sold (5,350,000) (4,950,000)
Gross profit $ 4,650,000 $ 4,450,000
Selling expenses $ (2,000,000) $(1,880,000)
Administrative expenses (1,500,000) (1,410,000)
Total operating expenses $ (3,500,000) $(3,290,000)
Operating income $ 1,150,000 $ 1,160,000
Other revenue and expense:
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, 20Y8 and 20Y7
20Y8 20Y7
Preferred Stock Common Stock Retained Earnings Preferred Stock Common Stock Retained Earnings
Balances, Jan. 1 $500,000 $500,000 $5,375,000 $500,000 $500,000 $4,545,000
Net income 900,000 925,000
Dividends:
Preferred stock (45,000) (45,000)
Common stock (50,000) (50,000)
Balances, Dec. 31 $500,000 $500,000 $6,180,000 $500,000 $500,000 $5,375,000

AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet December 31, 20Y8 and 20Y7
Dec. 31, 20Y8 Dec. 31, 20Y7
Assets
Current assets:
Cash $ 500,000 $ 400,000
Marketable securities 1,010,000 1,000,000
Accounts receivable (net) 740,000 510,000
Inventories 1,190,000 950,000
Prepaid expenses 250,000 229,000
Total current assets $3,690,000 $3,089,000
Long-term investments 2,350,000 2,300,000
Property, plant, and equipment (net) 3,740,000 3,366,000
Total assets $9,780,000 $8,755,000
Liabilities
Current liabilities $ 900,000 $ 880,000
Long-term liabilities:
Mortgage note payable, 10% $ 200,000 $ 0
Bonds payable, 10% 1,500,000 1,500,000
Total long-term liabilities $1,700,000 $1,500,000
Total liabilities $2,600,000 $2,380,000
Stockholders' Equity
Preferred $0.90 stock, $10 par $ 500,000 $ 500,000
Common stock, $5 par 500,000 500,000
Retained earnings 6,180,000 5,375,500
Total stockholders' equity $7,180,000 $6,375,000
Total liabilities and stockholders' equity $9,780,000 $8,755,000

Instructions:

Determine the following measures for 20Y8.

Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.

1. Working capital $
2. Current ratio
3. Quick ratio
4. Accounts receivable turnover
5. Days' sales in receivables days
6. Inventory turnover
7. Days' sales in inventory days
8. Debt ratio %
9. Ratio of liabilities to stockholders' equity
10. Ratio of fixed assets to long-term liabilities
11. Times interest earned times
12. Times preferred dividends earned times
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 %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting Tools For Business Decision Making

Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso

4th Edition

0470534788, 978-0470534786

More Books

Students also viewed these Accounting questions

Question

STEP 12,13?

Answered: 1 week ago

Question

=+Discuss the importance of research in social media practices

Answered: 1 week ago