Ratios Compared ynthetic products. Financial statement data for the firm follow with Industry A verages Adams Plastics, Inc., manufactures various plastic and 2019 Thousands of Dollars except Earnings per Share) $825,000 Sales revenue. Cost of goods sold.. 50,500 17,500 Dividends Eamings per share ADAMS PLASTICS, INC. Balance Sheets (Thousands of Dollars) Dec. 31,2018 Dec. 31, 2019 Assets Cash Accounts receivable (net) $ 2,100 2.700 .. 60,900 140.000 203,600 194,000 66,900 148,000 217,000 215,000 13,900 $445,900 Total current assets. Plant assets (net). Other assets Total assets . Liabilities and Stockholders' Equity Notes payable-banks $401,600 $ 31,400 25,000 23,000 27,600 25,10024,800 84,100 Accrued iabilities Total current liabilitios.. 10% bonds payable 72,800 150,000150.000 234.100 222800 Total liabilties Common stock, $10 par value (12,500,000 shares). Retained earnings 125,000 125,000 86,80053,800 211,800 178,800 $401,800 Total stockholders' equity Total liabilities and stockholders' equity $445,900 Requirea a. Using the given data, calculate items 1 through 8 below for 2019. Compare the performance of Adams Plastics, Inc., with the following industry averages and comment on its operations. Median Ratios for Manufacturers of Plastic and Synthetic Products . Quick ratio . 2. Current ratio. 3. Accounts receivable turnover 4. Inventory tunover. 5. Debt-to-equity ratio. 6. Gross profit percentage .. 7. Return on sales 8. Return on assets 7.9 times 7.8 times 0.95 32.7 percent 3.5 percent 6.3 percent Calculate the dividends paid per share of common stock. What was the dividend payout ratio? If the most recent price per share of common stock is $51.00, what is the price-earnings ratio? The dividend yield? b. c. Your strategy is to invest in companies that have low price/earnings ratio but appear to be in good shape financially. Assume that you have analyzed all other factors and that your decision depends on the results of ratio analysis. Requirements: Compute the following ratios for Adams Plastics for the current year and put your final answers in the chart below. Show your work on a separate paper for possible partial credit. Decide whether the company's stock better fits your investment strategy than others in the industry and describe in a paragraph your reasons why. Cite specific ratio results in support of your rationale. Would you invest your retirement funds in Adams? 1. 2. RESULTS: RATIO Industry Average 1.2 1.9 7.9 Adams Plastics 2019 Acid-test ratio (quick ratio) Current Ratio Accounts Receivable turnover Inventory turnover Debt-to-equity ratio Gross margin ratio Return on sales Return on total assets Dividends per share-CS Dividend yield (payout ratio) 7.8 0.95 32.7 % 3.5% 6.3% Earnings per share-CS Price/earnings ratio
