Problem 12 (30 Points)

The financial statements of Raiders Company appear below:

ELCAMINO COMPANY

Comparative Balance Sheet

December 31,

_____________________________________________________________________________

Assets 2017 2016

Cash ................................................................................................. $ 25,000 $ 40,000

Debt investments .............................................................................. 20,000 60,000

Accounts receivable (net) ................................................................. 50,000 30,000

Inventory ........................................................................................... 140,000 170,000

Property, plant and equipment (net) ................................................ 170,000 200,000

Total assets ................................................................................ $405,000 $500,000

Liabilities and stockholders' equity

Accounts payable ............................................................................. $ 25,000 $ 30,000

Short-term notes payable ................................................................. 40,000 90,000

Bonds payable .................................................................................. 75,000 160,000

Common stock .................................................................................. 160,000 145,000

Retained earnings ............................................................................ 105,000 75,000

Total liabilities and stockholders' equity...................................... $405,000 $500,000

ELCAMINO COMPANY

Income Statement

For the Year Ended December 31, 2017

Net sales (all on credit) ..................................................................... $360,000

Cost of goods sold ............................................................................ 184,000

Gross profit ....................................................................................... 176,000

Expenses

Interest expense ......................................................................... $11,000

Selling expenses ........................................................................ 30,000

Administrative expenses ............................................................ 20,000

Total expenses ..................................................................... 61,000

Income before income taxes ............................................................ 115,000

Income tax expense ......................................................................... 35,000

Net income ....................................................................................... $ 80,000

Additional information:

a. Cash dividends of $50,000 were declared and paid on common stock in 2017.

b. Weighted-average number of shares of common stock outstanding during 2017 was 50,000 shares.

c. Market price of common stock on December 31, 2017, was $16 per share.

d. Net cash provided by operating activities for 2017 was $70,000.

Instructions

Using the financial statements and additional information, compute the following ratios for the Elcamino Company for 2017. You Must show all computations.

1. Current ratio _________.

2. Return on common stockholders' equity _________.

3. Price-earnings ratio _________.

4. Inventory turnover _________.

5. Accounts receivable turnover _________.

6. Times interest earned _________.

7. Profit margin _________.

8. Days in inventory _________.

9. Payout ratio _________.

10. Return on assets _________.