PR 15-4A Nineteen measures of liquidity, solvency, and profitability The comparative financial statements of Blige Inc. are as follows. The market price of Blige Inc. common stock was $60 on December 31, 2012. Blige Inc. Comparative Retained Earnings Statement For the Years Ended December 31, 2012 and 2011 2012 2011 Retained earnings, January 1........... $1,810,000 $1,526,000 Add net income for year ............. 410,750 322,000 Total $2,220,750 $1,848,000 Deduct dividends: On preferred stock ... $ 16,000 $ 16,000 On common stock. ........ 22,000 22,000 Total ...................... $ 38,000 $ 38,000 Retained earnings, December 31.... $2,182,750 $1,810,000 Blige Inc. Comparative Income Statement For the Years Ended December 31, 2012 and 2011 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... 2012 $2,211,000 11,000 $2,200,000 825,000 $1,375,000 $ 445,500 321,750 $ 767,250 $ 607,750 33,000 $ 640,750 176,000 $ 464,750 54,000 $ 410,750 2011 $2,037,200 7,200 $2,030,000 811,200 $1,218,800 $ 484,000 290,400 $ 774,400 $ 444,400 26,400 $ 470,800 96,000 $ 374,800 52,800 $ 322,000 : Other expense (interest)................. Income before income tax ... Income tax expense ........... Net income.................. Blige Inc. Comparative Balance Sheet December 31, 2012 and 2011 Dec. 31, 2012 Dec 31, 2011 $ 528,000 800,000 425,000 310,000 100,000 $2,163,000 633,000 3,146,750 $5,942,750 $ 410,000 725,000 400,000 240,000 75,000 $1,850,000 560,000 2,150,000 $4,560,000 Assets Current assets: Cash ............... Temporary investments.......... 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, 8%, due 2017.. Bonds payable, 8%, due 2021 ........ Total long-term liabilities ........... Total liabilities ........... Stockholders' Equity Preferred $0.80 stock, $20 par........ Common stock, $ 10 par................. Retained earnings..... Total stockholders' equity............. Total liabilities and stockholders' equity.... $ 720,000 $ 710,000 $1,000,000 1,200,000 $2,200,000 $2,920,000 0 1,200,000 $1,200,000 $1,910,000 $ 400,000 440,000 2,182,750 $3,022,750 $5,942,750 $ 400,000 440,000 1,810,000 $2,650,000 $4,560,000 Instructions Determine the following measures for 2012, rounding to one decimal place: 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