On Time Clocks declared and paid a cash dividend of $7,400 in the current year Its comparative financial statements, prepared at December 31, reported the following summarized information Current Year Previous Year Income Statement Sales Revenue $ 150,000 $ 131,000 Cost of Goods Sold 68,000 64,000 Gross Profit 82,000 67,000 Operating Expenses 44,000 39,400 Interest Expense 4,800 4,800 Income before Income Tax Expense 33,200 22,800 Income Tax Expense (30 ) 9,960 6,840 Net Income $ 23,240 $ 15,960 Balance Sheet Cash $ 79,940 $ 30,000 Accounts Receivable, Net 25,000 20,000 Inventory 33,000 46,000 Property and Equipment, Net 103,000 113,000 Total Assets $ 240,940 $ 209,000 Accounts Payable $ 50,000 $ 34,200 Income Tax Payable 1,200 900 Notes Payable (long term) 48,000 48,000 Total Liabilities 99,200 83,100 Common Stock (par $10) 94,800 94,800 Retained Earnings 46,940 31,100 Total Liabilities and Stockholders Equity $ 240,940 $ 209,000 Required Compute the gross profit percentage in the current and previous years Are the current year results better, or worse, than those for the previous year Compute the net profit margin for the current and previous years Are the current year results better, or worse, than those for the previous year Compute the earnings per share for the current and previous years Are the current year results better, or worse, than those for the previous year Stockholders equity totaled $108,000 at the beginning of the previous year Compute the return on equity (ROE) ratios for the current and previous years Are the current year results better, or worse, than those for the previous year Net property and equipment totaled $118,000 at the beginning of the previous year Compute the fixed asset turnover ratios for the current and previous years Are the current year results better, or worse, than those for the previous year Compute the debt to assets ratios for the current and previous years Is debt providing financing for a larger or smaller proportion of the companys asset growth Compute the times interest earned ratios for the current and previous years Are the current year results better, or worse, than those for the previous year After On Time Clocks released its current years financial statements, the companys stock was trading at $26 After the release of its previous years financial statements, the companys stock price was $23 per share Compute the P E ratios for both years Does it appear that investors have become more (or less) optimistic about On Times future success

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Jul 18, 2024

On Time Clocks declared and paid a cash dividend of $7,400 in the current year. Its comparative financial statements, prepared at December 31, reported the

On Time Clocks declared and paid a cash dividend of $7,400 in the current year. Its comparative financial statements, prepared at December 31, reported the following summarized information:

	Current Year	Previous Year
Income Statement
Sales Revenue	$ 150,000	$ 131,000
Cost of Goods Sold	68,000	64,000
Gross Profit	82,000	67,000
Operating Expenses	44,000	39,400
Interest Expense	4,800	4,800
Income before Income Tax Expense	33,200	22,800
Income Tax Expense (30%)	9,960	6,840
Net Income	$ 23,240	$ 15,960
Balance Sheet
Cash	$ 79,940	$ 30,000
Accounts Receivable, Net	25,000	20,000
Inventory	33,000	46,000
Property and Equipment, Net	103,000	113,000
Total Assets	$ 240,940	$ 209,000
Accounts Payable	$ 50,000	$ 34,200
Income Tax Payable	1,200	900
Notes Payable (long-term)	48,000	48,000
Total Liabilities	99,200	83,100
Common Stock (par $10)	94,800	94,800
Retained Earnings	46,940	31,100
Total Liabilities and Stockholders Equity	$ 240,940	$ 209,000

Required:

Compute the gross profit percentage in the current and previous years. Are the current-year results better, or worse, than those for the previous year?
Compute the net profit margin for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
Compute the earnings per share for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
Stockholders equity totaled $108,000 at the beginning of the previous year. Compute the return on equity (ROE) ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
Net property and equipment totaled $118,000 at the beginning of the previous year. Compute the fixed asset turnover ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
Compute the debt-to-assets ratios for the current and previous years. Is debt providing financing for a larger or smaller proportion of the companys asset growth?
Compute the times interest earned ratios for the current and previous years. Are the current-year results better, or worse, than those for the previous year?
After On Time Clocks released its current years financial statements, the companys stock was trading at $26. After the release of its previous years financial statements, the companys stock price was $23 per share. Compute the P/E ratios for both years. Does it appear that investors have become more (or less) optimistic about On Times future success?