Question
Refer to the following financial statements for Crosby Corporation: CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 Sales $ 4,050,000 Cost of
Refer to the following financial statements for Crosby Corporation:
CROSBY CORPORATION Income Statement For the Year Ended December 31, 20X2 | |||
Sales | $ | 4,050,000 | |
Cost of goods sold | 2,690,000 | ||
Gross profit | $ | 1,360,000 | |
Selling and administrative expense | 652,000 | ||
Depreciation expense | 266,000 | ||
Operating income | $ | 442,000 | |
Interest expense | 88,300 | ||
Earnings before taxes | $ | 353,700 | |
Taxes | 110,000 | ||
Earnings after taxes | $ | 243,700 | |
Preferred stock dividends | 10,000 | ||
Earnings available to common stockholders | $ | 233,700 | |
Shares outstanding | 150,000 | ||
Earnings per share | $ | 1.56 | |
Statement of Retained Earnings For the Year Ended December 31, 20X2 | ||
Retained earnings, balance, January 1, 20X2 | $ | 200,900 |
Add: Earnings available to common stockholders, 20X2 | 233,700 | |
Deduct: Cash dividends declared and paid in 20X2 | 219,000 | |
Retained earnings, balance, December 31, 20X2 | $ | 215,600 |
Comparative Balance Sheets For 20X1 and 20X2 | |||||||
Year-End 20X1 | Year-End 20X2 | ||||||
Assets | |||||||
Current assets: | |||||||
Cash | $ | 107,000 | $ | 126,000 | |||
Accounts receivable (net) | 502,000 | 511,000 | |||||
Inventory | 684,000 | 707,000 | |||||
Prepaid expenses | 62,200 | 36,100 | |||||
Total current assets | $ | 1,355,200 | $ | 1,380,100 | |||
Investments (long-term securities) | 90,100 | 86,600 | |||||
Gross plant and equipment | $ 2,010,000 | $ 2,720,000 | |||||
Less: Accumulated depreciation | 1,670,000 | 1,936,000 | |||||
Net plant and equipment | 340,000 | 784,000 | |||||
Total assets | $ | 1,785,300 | $ | 2,250,700 | |||
Liabilities and Stockholders Equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 304,000 | $ | 649,000 | |||
Notes payable | 508,000 | 508,000 | |||||
Accrued expenses | 71,400 | 52,100 | |||||
Total current liabilities | $ | 883,400 | $ | 1,209,100 | |||
Long-term liabilities: | |||||||
Bonds payable, 20X2 | 111,000 | 236,000 | |||||
Total liabilities | $ | 994,400 | $ | 1,445,100 | |||
Stockholders equity: | |||||||
Preferred stock, $100 par value | $ | 90,000 | $ | 90,000 | |||
Common stock, $1 par value | 150,000 | 150,000 | |||||
Capital paid in excess of par | 350,000 | 350,000 | |||||
Retained earnings | 200,900 | 215,600 | |||||
Total stockholders equity | $ | 790,900 | $ | 805,600 | |||
Total liabilities and stockholders equity | $ | 1,785,300 | $ | 2,250,700 | |||
a. Prepare a statement of cash flows for the Crosby Corporation: (Amounts to be deducted should be indicated with parentheses or a minus sign.)
b. Compute the book value per common share for both 20X1 and 20X2 for the Crosby Corporation. (Round your answers to 2 decimals places.)
c. If the market value of a share of common stock is 2.5 times book value for 20X2, what is the firms P/E ratio for 20X2? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started