Question
The financial statements of the Precious Company appear below: PRECIOUS COMPANY Comparative Balance Sheet December 31, _________________________________________________________________________ Assets 2020 2019 Cash ............................................................................................. $ 25,000 $
The financial statements of the Precious Company appear below:
PRECIOUS COMPANY Comparative Balance Sheet December 31, _________________________________________________________________________
Assets 2020 2019
Cash ............................................................................................. $ 25,000 $ 40,000
Debt investments .......................................................................... 20,000 60,000
Accounts receivable (net) .............................................................. 50,000 30,000
Inventory ....................................................................................... 140,000 170,000
Property, plant and equipment (net) .............................................. 170,000 200,000
Total assets ............................................................................. $405,000 $500,000
Liabilities and stockholders' equity
Accounts payable .......................................................................... $ 25,000 $ 30,000
Short-term notes payable .............................................................. 40,000 90,000
Bonds payable .............................................................................. 75,000 160,000
Common shares ............................................................................ 160,000 145,000
Retained earnings ......................................................................... 105,000 75,000
Total liabilities and shareholders' equity ................................... $405,000 $500,000
PRECIOUS COMPANY Income Statement For the Year Ended December 31, 2020
Net sales (all on credit) .................................................................
$360,000
Cost of goods sold ........................................................................
184,000
Gross profit ...................................................................................
176,000
Expenses
Interest expense ...................................................................... $11,000
Selling expenses ..................................................................... 30,000
Administrative expenses .......................................................... 20,000
Total expenses ..................................................................
61,000
Income before income taxes .........................................................
115,000
Income tax expense ......................................................................
35,000
Net income ....................................................................................
$ 80,000
Additional information: A.Cash dividends of $50,000 were declared and paid on common stock in 2020. B.Weighted-average number of shares of common stock outstanding during 2020 was 50,000 shares. C.Market price of common stock on December 31, 2020, was $16 per share. D.Net cash provided by operating activities for 2020 was $70,000.
Required
Using the financial statements and additional information above, compute the following ratios for the Precious Company for 2020. Show all formulas and computations. 1Current ratio . 2Return on common stockholders' equity . 3Price-earnings ratio . 4Inventory turnover . 5Accounts receivable turnover . 6Times interest earned . 7Profit margin . 8Days in inventory . 9Payout ratio - 10Return on assets -
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