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Elite Trailer Parks has an operating profit of $282,000. Interest expense for the year was $39,200; preferred dividends paid were $29,500; and common dividends paid were $40,900. The tax was $61,700. The firm has 25,800 shares of common stock outstanding. a. Calculate the earnings per share and the common dividends per share for Elite Trailer Parks. (Round your answers to 2 decimal places.) b. What was the increase in retained earnings for the year? 2. Botox Facial Care had earnings after taxes of $350,000 in 20X1 with 200,000 shares of stock outstanding. The stock price was $72.50. In 20X2, earnings after taxes increased to $420,000 with the same 200,000 shares outstanding. The stock price was $83.00. a. Compute earnings per share and the P/E ratio for 20X1. (The P/E ratio equals the stock price divided by earnings per share.) (Do not round intermediate calculations. Round your final answers to 2 decimal places.) b. Compute earnings per share and the P/E ratio for 20X2. (Do not round intermediate calculations. Round your final answers to 2 decimal places.) c. Why did the P/E ratio change? (Do not round intemediate calculations. Input your answers as percents rounded to 2 decimal places.) 3. The Rogers Corporation has a gross profit of $730,000 and $277,000 in depreciation expense. The Evans Corporation also has $730,000 in gross profit, with $45,000 in depreciation expense. Selling and administrative expense is $179,000 for each company. a. Given that the tax rate is 40 percent, compute the cash flow for both companies. b. Calculate the difference in cash flow between the two firms. 4. The Holtzman Corporation has assets of $386,000, current liabilities of $49,000, and long-term liabilities of $110,000. There is $31,100 in preferred stock outstanding; 20,000 shares of common stock have been issued. a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.) b. If there is $32,000 in earnings available to common stockholders, and Holtzman's stock has a P/E of 24 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) 5. For December 31, 20X1, the balance sheet of Baxter Corporation was as follows: Current Assets Cash Accounts receivable Inventory Prepaid expenses Fixed Assets Gross plant and equipment Less: Accumulated depreciation Net plant and equipment Total assets Liabilities $ 27,000 32,000 42,000 13,700 $ 267,000 53,400 $ $ 213,600 328,300 Accounts payable Notes payable Bonds payable Stockholders' Equity Preferred stock Common stock Paid in Capital Retained earnings Total liabilities and stockholders' equity Sales for 20X2 were $305,000, and the cost of goods sold was 55 percent of sales. Selling and administrative expense was $30,500. Depreciation expense was 10 percent of plant and equipment (gross) at the beginning of the year. Interest expense for the notes payable was 12 percent, while the interest rate on the bonds payable was 14 percent. This interest expense is based on December 31, 20X1 balances. The tax rate averaged 30 percent. $3,700 in preferred stock dividends were paid, and $3,481 in dividends were paid to common stockholders. There were 10,000 shares of common stock outstanding. During 20X2, the cash balance and prepaid expenses balances were unchanged. Accounts receivable and inventory increased by 12 percent. A new machine was purchased on December 31, 20X2, at a cost of $52,000. Accounts payable increased by 20 percent. Notes payable increased by $7,700 and bonds payable decreased by $18,500, both at the end of the year. The preferred stock, common stock, and capital paid in excess of par accounts did not change. a. Prepare an income statement for 20X2. (Round EPS answer to 2 decimal places.) b. Prepare a statement of retained earnings for 20X2. c. Prepare a balance sheet as of December 31, 20X2. (Amounts to be deducted should be indicated with parentheses or a minus sign.) 6. Refer to the following financial statements for Crosby Corporation: CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 Sales Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating income Interest expense Earnings before taxes Taxes Earnings after taxes Preferred stock dividends Earnings available to common stockholders Shares outstanding Earnings per share $ $ 3,940,000 2,580,000 1,360,000 697,000 272,000 391,000 88,000 303,000 234,000 69,000 10,000 59,000 $ 150,000 0.39 $ $ $ $ Statement of Retained Earnings For the Year Ended December 31, 20X2 Retained earnings, balance, January 1, 20X2 $342,700 Add: Earnings available to common stockholders, 20X2 59,000 Deduct: Cash dividends declared and paid in 20X2 218,000 Retained earnings, balance, December 31, 20X2 $183,700 Comparative Balance Sheets For 20X1 and 20X2 Year-End 20X1 Assets Current assets: Cash Accounts receivable (net) Inventory Prepaid expenses $ Year-E 20X2 171,000 543,000 656,000 63,500 Total current assets Investments (long-term securities) Gross plant and equipment Less: Accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Notes payable Accrued expenses Total current liabilities Long-term liabilities: Bonds payable, 20X2 Total liabilities Stockholders' equity: Preferred stock, $100 par value Common stock, $1 par value Capital paid in excess of par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 1,433,500 92,000 $ 2,250,000 1,750,000 $ 2,730,000 2,022,000 500,000 $ 2,025,500 $ $ 365,000 514,000 79,800 958,800 134,000 $ 1,092,800 $ 90,000 150,000 350,000 342,700 $ 932,700 $ 2,025,500 a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with parentheses or a minus sign.) b. Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation. (Round your answers to 2 decimals places.) c. If the market value of a share of common stock is 3.3 times book value for 20X1, what is the firm's P/E ratio for 20X2 vs. 20X1? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) 7. Amigo Software Inc. has total assets of $889,000, current liabilities of $192,000, and long-term liabilities of $154,000. There is $87,000 in preferred stock outstanding. Thirty thousand shares of common stock have been issued. a. Compute book value (net worth) per share. (Round your answer to 2 decimal places.) b. If there is $56,300 in earnings available to common stockholders, and the firm's stock has a P/E of 23 times earnings per share, what is the current price of the stock? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) c. What is the ratio of market value per share to book value per share? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) 8. Using the Du Pont method, evaluate the effects of the following relationships for the Butters Corporation. a. Butters Corporation has a profit margin of 5.5 percent and its return on assets (investment) is 15.5 percent. What is its assets turnover? (Round your answer to 2 decimal places.) b. If the Butters Corporation has a debt-to-total-assets ratio of 25.00 percent, what would the firm's return on equity be? (Input your answer as a percent rounded to 2 decimal places.) c. What would happen to return on equity if the debt-to-total-assets ratio decreased to 20.00 percent? (Input your answer as a percent rounded to 2 decimal places.) 9. Jerry Rice and Grain Stores has $4,240,000 in yearly sales. The firm earns 5 percent on each dollar of sales and turns over its assets 2.5 times per year. It has $141,000 in current liabilities and $397,000 in long-term liabilities. a. What is its return on stockholders' equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) b. If the asset base remains the same as computed in part a, but total asset turnover goes up to 3.00, what will be the new return on stockholders' equity? Assume that the profit margin stays the same as do current and long-term liabilities. (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) 10. Assume the following data for Cable Corporation and Multi-Media Inc. Net income Sales Total assets Cable Corporation $ 39,000 381,000 412,000 Multi-Media Inc. $ 171,000 2,810,000 912,000 Total debt Stockholders' equity 189,000 223,000 499,000 413,000 a-1. Compute return on stockholders' equity for both firms. (Input your answers as a percent rounded to 2 decimal places.) a-2. Which firm has the higher return? Multi-Media Inc. Cable Corporation b. Compute the following additional ratios for both firms. (Input your Net income/Sales, Net income/Total assets and Debt/Total asset answers as a percent rounded to 2 decimal places. Round your Sales/Total assets answers to 2 decimal places.) 11. The balance sheet for Stud Clothiers is shown next. Sales for the year were $3,760,000, with 75 percent of sales sold on credit. STUD CLOTHIERS Balance Sheet 20X1 Assets Cash Accounts receivable Inventory Plant and equipment Total assets $ 58,000 356,000 301,000 454,000 $ 1,169,000 Liabilities and Equity Accounts payable Accrued taxes Bonds payable (long-term) Common stock Paid-in capital Retained earnings Total liabilities and equity $ 254,000 163,000 147,000 100,000 150,000 355,000 $ 1,169,000 Compute the following ratios: (Use a 360-day year. Do not round intermediate calculations. Round your answers to 2 decimal places. Input your debt-to-total assets answer as a percent rounded to 2 decimal places.) . 12. Using the income statement for Times Mirror and Glass Co., compute the following ratios: TIMES MIRROR AND GLASS Co. Income Statement Sales Cost of goods sold Gross profit $292,000 187,000 $105,000 Selling and administrative expense Lease expense Operating profit* Interest expense Earnings before taxes Taxes (30%) Earnings after taxes 47,600 14,800 $ 42,600 7,400 $ 35,200 14,080 $ 21,120 *Equals income before interest and taxes. a.Compute the interest coverage ratio. (Round your answer to 2 decimal places.) b.Compute the fixed charge coverage ratio. (Round your answer to 2 decimal places.) The total assets for this company equal $254,000. Set up the equation for the Du Pont system of ratio analysis. c.Compute the profit margin ratio. (Input your answer as a percent rounded to 2 decimal places.) d.Compute the total asset turnover ratio. (Round your answer to 2 decimal places.) e. Compute the return on assets (investment). (Do not round interme 13. Quantum Moving Company has the following data. Industry information also is shown. Year 20X1 20X2 20X3 Company data Net Income Total Assets $ 413,000 $ 2,843,000 451,000 3,283,000 460,000 3,773,000 Year 20X1 20X2 20X3 Debt $ 1,695,000 1,774,000 1,969,000 Total Assets $ 2,843,000 3,283,000 3,773,000 Industry Data on Net Income/Total Assets 12.2% 7.7 4.1 Industry Data on Debt/Total Assets 55.5% 49.0 34.0 a. Calculate the company's data in terms of: (Input your answers as a percent rounded to 1 decimal place.) b. As an industry analyst comparing the firm to the industry, are you likely to praise or criticize the firm in terms of: 14. The Canton Corporation shows the following income statement. The firm uses FIFO inventory accounting. CANTON CORPORATION Income Statement for 20X1 307,10 Sales $ (16,600 units at $18.50) 0 199,20 Cost of goods sold (16,600 units at $12.00) 0 107,90 Gross profit $ 0 Selling and administrative expense 18,426 Depreciation 11,600 Operating profit $ 77,874 Taxes (30%) 23,362 Aftertax income $ 54,512 a. Assume in 20X2 the same 16,600-unit volume is maintained, but that the sales price increases by 10 percent. Because of FIFO inventory policy, old inventory will still be charged off at $12.00 per unit. Also assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute aftertax income for 20X2. (Do not round intermediate calculations. Round your answer to the nearest whole number.) b. In part a, by what percent did aftertax income increase as a result of a 10 percent increase in the sales price? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) c. Now assume that in 20X3 the volume remains constant at 16,600 units, but the sales price decreases by 15 percent from its year 20X2 level. Also, because of FIFO inventory policy, cost of goods sold reflects the inflationary conditions of the prior year and is $12.50 per unit. Further, assume selling and administrative expense will be 6 percent of sales and depreciation will be unchanged. The tax rate is 30 percent. Compute the aftertax income. (Round the sales price per unit to 2 decimal places but do not round any other intermediate calculations. Round your final answer to the nearest whole dollar amount.) 15. The Griggs Corporation has credit sales of $1,075,900. Total assets turnover Cash to total assets 2.90 times 1.30 % Accounts receivable turnover Inventory turnover Current ratio Debt to total assets 10 14 1.88 45 times times times % Using the above ratios, complete the balance sheet. (Round your answers to the nearest whole number.) 16. Using the financial statements for the Snider Corporation, calculate the 13 basic ratios found in the chapter. SNIDER CORPORATION Balance Sheet December 31, 20X1 Assets Current assets: Cash Marketable securities Accounts receivable (net) Inventory Total current assets Investments Plant and equipment. Less: Accumulated depreciation Net plant and equipment Total assets Liabilities and Stockholders' Equity Current liabilities: Accounts payable Notes payable Accrued taxes Total current liabilities Long-term liabilities: Bonds payable Total liabilities Stockholders' equity Preferred stock, $50 par value Common stock, $1 par value Capital paid in excess of par Retained earnings Total stockholders' equity Total liabilities and stockholders' equity SNIDER CORPORATION Income Statement For the Year Ending December 31, 20X1 $ 56,800 27,400 196,000 236,000 $ 516,200 66,200 $656,000 220,000 436,000 $1,018,400 $ 91,500 73,900 10,700 $ 176,100 156,600 $ 332,700 $ 100,000 80,000 190,000 315,700 $ 685,700 $1,018,400 Sales (on credit) Cost of goods sold Gross profit Selling and administrative expenses Operating profit (EBIT) Interest expense Earnings before taxes (EBT) Taxes Earnings after taxes (EAT) $ 2,082,000 1,365,000 $ 717,000 508,000* $ 209,000 25,900 $ 183,100 85,400 $ 97,700 *Includes $43,200 in lease payments. Using the above financial statements for the Snider Corporation, calculate the following ratios. a. Profitability ratios. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) b. Assets utilization ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.) c. Liquidity ratios. (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. Debt utilization ratios. (Do not round intermediate calculations. Input your debt to total assets answer as a percent rounded to 2 decimal places. Round your other answers to 2 decimal places.) 17. Given the financial statements for Jones Corporation and Smith Corporation: JONES CORPORATION Current Assets Cash Accounts receivable Inventory Long-Term Assets Gross fixed assets Less: Accumulated depreciation Net fixed assets* Total assets Sales (on credit) Cost of goods sold $ 29,300 89,000 53,100 $ 560,000 151,300 408,700 $ 580,100 $1,286,000 738,000 Liabilities Accounts payable Bonds payable (long term) Stockholders' Equity Common stock Paid-in capital Retained earnings Total liabilities and equity Gross profit Selling and administrative expense Depreciation expense Operating profit Interest expense Earnings before taxes Tax expense Net income $ 548,000 331,000 52,700 $ 164,300 14,000 $ 150,300 99,000 $ 51,300 *Use net fixed assets in computing fixed asset turnover. Includes $16,900 in lease payments. SMITH CORPORATION Current Assets Cash Marketable securities Accounts receivable Inventory Long-Term Assets Gross fixed assets Less: Accumulated depreciation Net fixed assets* Total assets $ 44,900 15,300 72,200 78,300 $ 565,000 250,400 314,600 $ 525,300 Liabilities Accounts payable Bonds payable (long term) Stockholders' Equity Common stock Paid-in capital Retained earnings Total liabilities and equity *Use net fixed assets in computing fixed asset turnover. SMITH CORPORATION Sales (on credit) Cost of goods sold Gross profit Selling and administrative expense Depreciation expense Operating profit Interest expense Earnings before taxes Tax expense Net income $1,230,000 739,000 $ 491,000 288,000 54,700 $ 148,300 24,200 $ 124,100 62,200 $ 61,900 Includes $16,900 in lease payments. a. Compute the following ratios. (Use a 360-day year. Do not round intermediate calculations. Input your profit margin, return on assets, return on equity, and debt to total assets answers as a percent rounded to 2 decimal places. Round all other answers to 2 decimal places.)