Nineteen Measures of Solvency and Profitability The comparative financial statements of Stargel Inc. are as follows. The market price of Stargel Inc. common stock was $119.70 on December 31, 2016. Stargel Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Retained earnings, January 1 $5,375,000 $4,545,000 Add net income for year 900,000 925,000 Total $6,275,000 $5,470,000 Deduct dividends: On preferred stock $45,000 $45,000 On common stock 50,000 50,000 Total $95,000 $95,000 Retained earnings, December 31 $6,180,000 $5,375,000 Stargel Inc. Comparative Income Statement For the Years Ended December 31, 2016 and 2015 2016 2015 Sales (all on account) $10,050,000 $9,450,000 Sales returns and allowances 50,000 50,000 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 Income from operations $1,150,000 $1,160,000 Other income 150,000 140,000 $1,300,000 $1,300,000 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 Stargel Inc. Comparative Balance Sheet December 31, 2016 and 2015 Dec. 31, 2016 Dec. 31, 2015 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, 8.8%, due 2021 $200,000 $0 Bonds payable, 9%, due 2017 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 5,375,000 Total stockholders' equity $7,180,000 $6,375,000 Total liabilities and stockholders' equity $9,780,000 $8,755,000 Required: Determine the following measures for 2016, rounding to one decimal place, except dollars amounts which should be rounded to the nearest cent. Use the rounded answer of the requirement for subsequent requirement, if required. Assume 365 days a year. 1. Working capital $ 400,000 2. Current ratio 1 3. Quick ratio 2.0 4. Accounts receivable turnover 62.500 5. Number of days' sales in receivables 18.82 days 6. Inventory turnover 8 7. Number of days' sales in inventory 45.62 days 8. Ratio of fixed assets to long-term liabilities 3.336 9. Ratio of liabilities to stockholders' equity 0.4767 10. Number of times interest charges are earned 6.7575 11. Number of times preferred dividends are earned 20 12. Ratio of sales to assets 2,515 13. Rate earned on total assets 6.289 % 14. Rate earned on stockholders' equity 9.289 % 15. Rate earned on common stockholders' equity 9.405 % 16. Earnings per share on common stock $ 28.50 17. Price-earnings ratio 2.5 18. Dividends per share of common stock $ 1 19. Dividend yield 1.40 %

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