Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Twenty metrics of liquidity, Solvency, and Profitability The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc.

Twenty metrics of liquidity, Solvency, and Profitability

The comparative financial statements of Automotive Solutions Inc. are as follows. The market price of Automotive Solutions Inc. common stock was $66 on December 31, 20Y8.

AUTOMOTIVE SOLUTIONS INC. Comparative Income Statement For the Years Ended December 31, 20Y8 and 20Y7
20Y8 20Y7
Sales $3,016,725 $2,779,500
Cost of goods sold (1,095,000) (1,007,400)
Gross profit $1,921,725 $1,772,100
Selling expenses $(649,700) $(792,250)
Administrative expenses (553,445) (465,290)
Total operating expenses (1,203,145) (1,257,540)
Operating income $718,580 $514,560
Other revenue and expense:
Other income 37,820 32,840
Other expense (interest) (200,000) (110,400)
Income before income tax $556,400 $437,000
Income tax expense (66,800) (52,500)
Net income $489,600 $384,500

AUTOMOTIVE SOLUTIONS INC. Comparative Statement of Stockholders Equity For the Years Ended December 31, 20Y8 and 20Y7
20Y8 20Y7
Preferred Stock Common Stock Retained Earnings Preferred Stock Common Stock Retained Earnings
Balances, Jan. 1 $450,000 $510,000 $2,217,475 $450,000 $510,000 $1,877,525
Net income 489,600 384,500
Dividends:
Preferred stock (6,300) (6,300)
Common stock (38,250) (38,250)
Balances, Dec. 31 $450,000 $510,000 $2,662,525 $450,000 $510,000 $2,217,475

AUTOMOTIVE SOLUTIONS INC. Comparative Balance Sheet December 31, 20Y8 and 20Y7
Dec. 31, 20Y8 Dec. 31, 20Y7
Assets
Current assets:
Cash $461,940 $472,510
Temporary investments 699,160 783,020
Accounts receivable (net) 547,500 511,000
Inventories 408,800 321,200
Prepaid expenses 87,392 94,500
Total current assets $2,204,792 $2,182,230
Long-term investments 1,678,006 440,282
Property, plant, and equipment (net) 3,000,000 2,700,000
Total assets $6,882,798 $5,322,512
Liabilities
Current liabilities $760,273 $765,037
Long-term liabilities:
Mortgage note payable, 8%, due in 15 years $1,120,000 $0
Bonds payable, 8%, due in 20 years 1,380,000 1,380,000
Total long-term liabilities $2,500,000 $1,380,000
Total liabilities $3,260,273 $2,145,037
Stockholders' Equity
Preferred $0.70 stock, $50 par $450,000 $450,000
Common stock, $10 par 510,000 510,000
Retained earnings 2,662,525 2,217,475
Total stockholders' equity $3,622,525 $3,177,475
Total liabilities and stockholders' equity $6,882,798 $5,322,512

Instructions:

Determine the following measures for 20Y8. Round ratio values to one decimal place and dollar amounts to the nearest cent. For number of days' sales in receivables and number of days' sales in inventory, round intermediate calculations to the nearest whole dollar and final amounts to one decimal place. Assume there are 365 days in the year.

I am missing 12-20. Thank you!

12. Times preferred dividends earned fill in the blank 12 times
13. Asset turnover fill in the blank 13
14. Return on total assets fill in the blank 14 %
15. Return on stockholders equity fill in the blank 15 %
16. Return on common stockholders equity fill in the blank 16 %
17. Earnings per share on common stock $fill in the blank 17
18. Price-earnings ratio fill in the blank 18
19. Dividends per share of common stock $fill in the blank 19
20. Dividend yield fill in the blank 20 %

Feedback

11. Divide the sum of income before income tax plus interest expense by interest expense. 12. Divide net income by preferred dividends [Preferred stock par value x dividend per preferred share]. 13. Divide net sales by average property, plant & equipment, . Average PPE = (Beginning PPE + Ending PPE) 2 14. Divide the sum of net income plus interest expense by average total assets. Average total assets = (Beginning Total Assets + Ending Total Assets) 2 15. Divide net income by average stockholders equity. Average stockholders equity = (Beginning StockholdersEquity + Ending StockholdersEquity) 2 16. Divide net income minus preferred dividends [Preferred stock par value x dividend per preferred share] by average common stockholders equity. Common StockholdersEquity = Common Stock + Retained Earnings Average Common StockholdersEquity = (Beginning Common Stockholders equity + Ending Common StockholdersEquity) 2 17. Divide net income minus preferred dividends [Preferred stock par value x dividend per preferred share] by common shares outstanding (common stock par value). 18. Divide common market share price by common earnings per share (use answer from requirement 17). 19. Divide common dividends (from Statement of Stockholders Equity) by common shares outstanding (common stock par value). 20. Divide common dividends per share (use answer from requirement 19) by market share price.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Microeconomics

Authors: Michael Parkin

6th Edition

0321112075, 9780321112071

More Books

Students also viewed these Accounting questions

Question

Why is it important to have a dream? (p. 49)

Answered: 1 week ago