Sterling Company Income Statement for the Year Ended December 31, 2019 Sales revenue Less: Cost of goods sold Gross profits Less: Operating expenses Selling expense General and administrative expenses Lease expense Depreciation expense Total operating expense Operating profits Less: Interest expense Net profits before taxes Less: Taxes (rate -21%) Net profits after taxes Less: Preferred stock dividends Earnings available for common stockholders Earnings per share (EPS) $10,000,000 7,500,000 $ 2,500,000 $ 300,000 650,000 50,000 200,000 $ 1,200,000 $ 1,300,000 200,000 $ 1,100,000 231,000 $ 869,000 50,000 819,000 $4.10 Sterling Company Balance Sheet December 31, 2019 Assets Cash Marketable securities Accounts receivable Inventories Total current assets Gross fixed assets (at cost) Less: Accumulated depreciation Net fixed assets Other assets Total assets $ 200,000 Liabilities and Stockholders' Equity Accounts payable $ 900,000 50,000 Notes payable 800,000 Accruals 200,000 100,000 950,000 Total current liabilities $ 1,200,000 $ 2,000,000 Long-term debt (includes $12,000,000 financial leases) $ 3,000,000 3,000,000 Preferred stock (25,000 $9,000,000 $1,000,000 1,000,000 $12,000,000 600,000 shares, $2 dividend) Common stock (200,000 shares at $3 par) Paid-in capital in excess of par value Retained earnings "Annual credit purchases of $6,200,000 were made during the year. Total stockholders' equity Total liabilities and stockholders' equity "On December 31, 2019, the firm's common stock closed at $39.50 per share. 5,200,000 1,000,000 $ 7,800,000 $12,000,000 Source: Gitman, L., & Zutter, C. J. (2021). Principles of managerial finance (16th ed.). Pearson Debt ratio Figures are in thousands, two decimal places, hand writing is compulsory Liquidity Ratios Current ratio: Quick Activities Ratios Inventory turnover AAI AR turnover ACP AP turnover APP 2,000 = 1,200 1.67 CCC Total asset turnover = " " Profitability ratios Gross profit margin = Operating profit margin Net profit margin Earnings per share Return on assets Return on equity Market Ratios Price Earnings " " = Book Value = = Market Book