Ratio Analysis of Comparative Financial Statements

Amounts from the comparative income statement and balance sheet of Miller Electronics Corporation for the last two years are as follows:

Miller Electronics Corporation

Comparative Income Statement

For Years Ended December 31, 20-2 and 20-1

20-2 20-1

Net Sales (all on account) $657,120 $419,020

Cost of goods sold 395,970 258,130

Gross profit $261,150 $160,890

Administrative expenses $64,413 $43,254

Selling expenses 66,387 44,052

Total operating expenses $130,800 $87,306

Operating income $130,350 $73,584

Interest expense 1,250 1,160

Income before income taxes $129,100 $72,424

Income tax expense 30,070 14,087

Net income $99,030 $58,337

Miller Electronics Corporation

Comparative Balance Sheet

December 31, 20-2 and 20-1

20-2 20-1

Assets

Current assets:

Cash $43,973 $22,643

Receivables (net) 72,973 47,420

Merchandise inventory 91,433 50,689

Supplies and prepayments 3,874 1,181

Total current assets $212,253 $121,933

Property, plant, and equipment:

Office equipment (net) $12,066 $8,530

Factory equipment (net) 105,167 71,620

Total property, plant, and equipment 117,233 $80,150

Total assets $329,486 $202,083

Liabilities

Current liabilities

Notes payable $10,090 $5,990

Accounts payable 43,539 30,192

Accrued and withheld payroll taxes 6,108 5,238

Total current liabilities $59,737 $41,420

Stockholders' Equity

Common stock ($10 par) $100,000 $84,000

Retained earnings 169,749 76,663

Total stockholders' equity $269,749 $160,663

Total liabilities and stockholders' equity $329,486 $202,083

Required:

Calculate the following ratios and amounts for 20-1 and 20-2. Round all calculations to two decimal places. Use 365 days when computing the accounts receivable and merchandise inventory turnover.

(a) Return on assets (Total assets on January 1, 20-1, were $172,863.)

(b) Return on common stockholders' equity (Total common stockholders' equity on January 1, 20-1, was $109,223.)

(c) Earnings per share of common stock (The average numbers of shares outstanding were 8,400 shares in 20-1 and 9,200 in 20-2.)

(d) Book value per share of common stock

(e) Quick ratio

(f) Current ratio

(g) Working capital

(h) Receivables turnover (Net receivables on January 1, 20-1, were $39,180.)

(i) Merchandise inventory turnover (Merchandise inventory on January 1, 20-1, was $48,869.)

(j) Debt-to-equity ratio

(k) Asset turnover (Assets on January 1, 20-1, were $172,863.)

(l) Times interest earned ratio

(m) Profit margin ratio

(n) Assets-to-equity ratio

(o) Price-earnings ratio (The market price of the common stock was $100.00 and $85.00 on December 31, 20-2 and 20-1, respectively.)