Problem 14-22A (Algo) Ratio analysis LO 14-3, 14-4, 14-5

1 Problem 14-22A (Algo) Ratio analysis LO 14-3, 14-4, 14-5 10 points Rundle Company's income statement information follows: Net sales Income before interest and taxes Net income after taxes Interest expense Stockholders' equity, December 31 (Year 1: $194,000) Common stock, December 31 Year 3 $416,000 118,000 55,560 9,300 310,000 194,750 Year 2 $ 254,000 82,000 63,900 7,450 232,000 172,750 The average number of shares outstanding was 7,790 for Year 3 and 6,910 for Year 2. Required Compute the following ratios for Rundle for Year 3 and Year 2. a. Number of times interest was earned. (Round your answers to 2 decimal places.) b. Earnings per share based on the average number of shares outstanding. (Round your answers to 2 decimal places.) c. Price-earnings ratio (market prices: Year 3, $64 per share; Year 2, $75 per share). (Do not round intermediate calculations. Round your answers to 2 decimal places.) d. Return on average equity. (Round your percentage answers to 2 decimal places (i.e., 0.2345 should be entered as 23.45).) e. Net margin. (Round your percentage answers to 2 decimal places (i.e., 0.2345 should be entered as 23.45).) Year 2 Year 3 times times a. Interest earned b. Earnings per share C. Price-earnings ratio d. Return on average equity e. Net margin times times % % %