The following financial statements apply to Franklin Company: Year 2 Year 1 $ 220, 200 $ 181,700 125,500 20, 900 10, 100 1,200 21,000 178, 700 $ 41,500 102, 700 18,900 9, 100 1,200 16,100 148,000 $ 33, 700 Revenues Expenses Cost of goods sold Selling expenses General and administrative expenses Interest expense Income tax expense Total expenses Net income Assets Current assets Cash Marketable securities Accounts receivable Inventories Prepaid expenses Total current assets Plant and equipment (net) Intangibles Total assets Liabilities and Stockholders' Equity 6,000 2, 300 35, 300 101,900 4,500 150,000 105, 200 20, 300 $ 275, 500 $ 7,200 2,300 31,600 95, 100 3,500 139, 700 105,200 e $ 244,900 Liabilities and Stockholders' Equity Liabilities Current liabilities Accounts payable Other Total current liabilities Bonds payable Total liabilities Stockholders' equity Common stock (43,600 shares) Retained earnings Total stockholders' equity Total liabilities and stockholders' equity $ 38, 700 16,800 55,500 66,000 121,500 $ 34,500 16, 700 51,200 67,000 118,200 113,700 113,700 40,300 13,000 154,000 126, 700 $ 275,500 $ 244,900 Required Calculate the following ratios for Year 1 and Year 2. Since opening balance numbers are not presented do not use averages when calculating the ratios for Year 1. Instead, use the number presented on the Year 1 balance sheet. a. Net margin. (Round your answers to 2 decimal places.) b. Return on investment. (Round your answers to 2 decimal places.) c. Return on equity. (Round your answers to 2 decimal places.) d. Earnings per share. (Round your answers to 2 decimal places.) e. Price-earnings ratio (market prices at the end of Year 1 and Year 2 were $6.07 and $4.81, respectively). (Round your intermediate calculations and final answers to 2 decimal places.) f. Book value per share of common stock. (Round your answers to 2 decimal places.) 9. Times interest earned. Exclude extraordinary income in the calculation as they cannot be expected to recur and, therefore, will not be available to satisfy future interest payments. (Round your answers to 2 decimal places.) h. Working capital I. Current ratio. (Round your answers to 2 decimal places.) 1. Quick (acid-test) ratio (Round your answers to 2 decimal places.) k. Accounts receivable turnover. (Round your answers to 2 decimal places.) 1. Inventory turnover (Round your answers to 2 decimal places.) m. Debt-to-equity ratio, (Round your answers to 2 decimal places.) n. Debt-to-assets ratio. (Round your answers to the nearest whole percent.) Year 2 Year 1 96 a 96 % % % 96 e. times times times times Net margin b. Return on investment C. Return on equity d. Earnings per share Price-earnings ratio f. Book value per share of common stock 9 Times interest earned h. Working capital Current ratio 1. Quick (acid-test) ratio k. Accounts receivable turnover Inventory turnover m. Debt-to-equity ratio Debt-to-assets ratio times times times times n. 96 %
