Question
Solomon Companys income statement information follows: Year 3 Year 2 Net sales $ 415,000 $ 267,000 Income before interest and taxes 111,000 80,000 Net income
Solomon Companys income statement information follows:
| Year 3 | Year 2 | ||||||
| Net sales | $ | 415,000 | $ | 267,000 | |||
| Income before interest and taxes | 111,000 | 80,000 | |||||
| Net income after taxes | 55,000 | 62,800 | |||||
| Interest expense | 9,350 | 7,700 | |||||
| Stockholders equity, December 31 (Year 1: $194,000) | 308,000 | 225,000 | |||||
| Common stock, December 31 | 197,500 | 175,000 | |||||
The average number of shares outstanding was 7,900 for Year 3 and 7,000 for Year 2. Required Compute the following ratios for Solomon 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, $66 per share; Year 2, $73 per share).(Round your intermediate and final answers to 2 decimal places.) d. Return on average equity. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45)) e. Net margin. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45))
Solomon Companys income statement information follows:
| Year 3 | Year 2 | ||||||
| Net sales | $ | 415,000 | $ | 267,000 | |||
| Income before interest and taxes | 111,000 | 80,000 | |||||
| Net income after taxes | 55,000 | 62,800 | |||||
| Interest expense | 9,350 | 7,700 | |||||
| Stockholders equity, December 31 (Year 1: $194,000) | 308,000 | 225,000 | |||||
| Common stock, December 31 | 197,500 | 175,000 | |||||
The average number of shares outstanding was 7,900 for Year 3 and 7,000 for Year 2. Required Compute the following ratios for Solomon 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, $66 per share; Year 2, $73 per share).(Round your intermediate and final answers to 2 decimal places.) d. Return on average equity. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45)) e. Net margin. (Round your answers to 2 decimal places. (i.e., .2345 should be entered as 23.45))
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Advanced Financial Accounting
Authors: Richard E. Baker, Valdean C. Lembke, Thomas E. King
3rd Edition
0070054142, 978-0070054141
